Global Coffee Production Surge Weighs on Today's Coffee Rate Amid Mixed Supply Signals

Market Overview: Arabica and Robusta Face Divergent Pressures

Today coffee rate movements reflect complex market dynamics, with March arabica futures (KCH26) declining 3.41% and March ICE robusta (RMH26) retreating 1.02%. The weakness stems from multiple converging factors: anticipated rainfall across Brazil’s central regions, dollar strength hitting four-week highs, and concerns about oversupply in the coming season.

Production Outlook Dampens Market Sentiment

The International Coffee Organization and USDA forecasts have shifted market expectations significantly. Global coffee production for 2025/26 is projected to reach a record 178.848 million bags, representing a 2% increase year-over-year. However, this aggregate figure masks divergent regional trends that are reshaping today’s coffee rate dynamics.

Robusta supply expansion presents the most pronounced headwind. Vietnam, commanding the world’s largest robusta output, has accelerated shipments dramatically—2025 exports surged 17.5% year-over-year to 1.58 million metric tons according to Vietnam’s National Statistics Office. More significantly, the USDA’s Foreign Agriculture Service forecasts Vietnam’s 2025/26 production climbing 6.2% to 30.8 million bags, a four-year high. The Vietnam Coffee and Cocoa Association suggests production could expand an additional 10% if favorable weather persists, further pressuring today’s coffee rate.

Arabica Dynamics: Tightening Supply Meets Demand Uncertainty

Arabica presents a more nuanced picture. Despite Brazil, the globe’s top arabica producer, increasing its 2025 harvest estimate by 2.4% to 56.54 million bags, the USDA expects Brazil’s 2025/26 output to decline 3.1% to 63 million bags. Global arabica production is forecast to drop 4.7% to 95.515 million bags, signaling tightening conditions.

Recent weather data underscores this tension. Minas Gerais, Brazil’s primary arabica region, received only 47.9 mm of rain in the week ending January 2—just 67% of historical averages. This scarcity previously buoyed arabica prices to four-week highs, yet today’s coffee rate decline reflects shifting expectations as rainfall forecasts promise moisture relief.

Inventory Dynamics and Trade Disruptions

ICE inventory levels provide mixed signals. Arabica stocks fell to a 1.75-year low of 398,645 bags by November 20 before recovering to 461,829 bags by mid-week. Robusta inventories similarly hit one-year lows in December but have since bounced to five-week highs.

U.S. import patterns reveal structural market shifts affecting today’s coffee rate. Brazilian coffee imports fell 52% between August and October compared to the prior year, totaling 983,970 bags, as tariff-related uncertainty dampened purchasing. Although tariffs have since eased, U.S. coffee stocks remain constrained, limiting buyer appetite.

Global Supply Equilibrium Tightens

While production reaches record levels, the International Coffee Organization reported that worldwide coffee exports for October-September declined 0.3% year-over-year to 138.658 million bags, suggesting tight current balances. More tellingly, ending stocks for 2025/26 are predicted to contract 5.4% to 20.148 million bags from 21.307 million the prior year.

The currency backdrop amplifies downward pressure on today’s coffee rate. The U.S. dollar recently reached four-week peaks, increasing price pressure on commodities priced in greenbacks. Combined with robust robusta supplies from Vietnam and cautious arabica demand from U.S. buyers working through prior-year inventory constraints, the market reflects a temporary reprieve in supply concerns—a relief that manifests in softer price action today.