Coffee Prices Rally Today as Dollar Weakness Sparks Market Recovery

Coffee prices posted significant gains today, with both major varieties climbing as a weakened dollar index triggered broad-based short covering across commodity markets. March arabica coffee futures closed up 0.92%, while March robusta coffee futures surged 2.88% to reach 1.5-month highs, signaling renewed strength in the coffee complex as traders repositioned ahead of key supply reports.

Arabica and Robusta Both Gain Ground

The dual rally in today’s coffee prices reflects strong momentum building in both the arabica and robusta segments. Arabica futures, the higher-quality variety favored by specialty roasters, extended gains while robusta, the commodity-grade coffee that dominates industrial demand, posted even more impressive percentage gains. The dollar’s decline to a 3.5-month low served as the primary catalyst, encouraging investors to re-cover short positions that had been accumulated during recent weakness.

Brazilian Export Decline and Weather Concerns Underpin Prices

Supply-side pressures are supporting coffee prices in today’s trading, with Brazil’s December export data revealing concerning trends. The country reported that total green coffee exports plummeted 18.4% compared to the previous year, with arabica shipments down 10% year-over-year and robusta shipments down 61%. Brazil, which dominates arabica coffee production globally, is also grappling with below-average rainfall in its primary growing regions. Minas Gerais, the world’s largest arabica coffee-growing area, received only 53% of historical average rainfall during January, raising concerns about the 2025/26 crop development.

Separately, coffee inventories tracked by ICE have recovered from recent lows, adding complexity to the supply picture. Arabica stockpiles rebounded to a 2.5-month high while robusta inventories also climbed from their December lows, suggesting some improvement in physical supplies despite the export headwinds from Brazil.

Vietnam’s Surging Output Offsets Some Gains

Vietnam, the world’s largest robusta coffee producer, is presenting a counterbalance to Brazil’s supply tightness. The country’s 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, while production is projected to climb 6% to 1.76 million metric tons—a four-year high. Industry officials suggest that favorable weather conditions could push 2025/26 output even 10% higher than the prior crop year, threatening to inject additional robusta supplies into global markets.

Global Supply Outlook: Mixed Signals Ahead

The broader global picture shows conflicting signals for coffee prices going forward. International Coffee Organization data indicated that global exports for the current marketing year remain relatively flat year-over-year, while the USDA’s Foreign Agriculture Service projects world coffee production will reach a record 178.848 million bags in 2025/26. However, arabica production is expected to decline 4.7% despite the record global total, due to robusta’s projected 10.9% increase.

Looking at regional forecasts, Brazil’s 2025/26 output is projected to fall 3.1% while Vietnam’s production continues climbing toward multi-year highs. These divergent trajectories suggest that while overall coffee supplies are tightening for the premium arabica segment, the commodity robusta market faces ample supply pressures. Ending stocks are projected to fall modestly by 5.4% to 20.148 million bags, indicating gradually tightening conditions but hardly a crisis scenario.

Coffee prices today reflect this complex interplay of near-term factors—dollar weakness, Brazilian export declines, and weather concerns—balanced against longer-term supply growth from Vietnam and forecast increases in global production. Traders navigating today’s coffee futures will need to weigh the bull case from current supply disruptions against the bear case from expanding production capacity in key regions.