London Robusta Coffee Market Faces Pressure as Supply Forecasts Rise and Weather Eases Drought Concerns

Global Coffee Supply Surge Reshapes Market Dynamics

The coffee market is experiencing significant headwinds as multiple supply-side factors converge to weigh on prices. March arabica coffee futures (KCH26) declined 3.41% while March ICE robusta coffee (RMH26) fell 1.02%, reflecting broader weakness across both major coffee varieties. The London robusta coffee market has similarly come under pressure, as growing production projections from leading robusta suppliers point to ample availability in the coming season.

Weather Relief and Currency Strength Drive Price Weakness

Recent meteorological forecasts have substantially altered the near-term narrative for arabica coffee. Rainfall predictions across Brazil’s key coffee-producing regions have relieved earlier concerns about insufficient moisture, which previously supported prices at elevated levels. This shift in weather expectations coincided with a strengthening U.S. dollar—reaching its highest point in four weeks—creating a dual headwind for commodity prices, particularly coffee. The combination has effectively erased the premium that drought-related supply fears had previously commanded in the market.

Vietnam’s Export Surge Pressures Robusta Valuations

Vietnam’s robusta sector is driving considerable supply-side pressure across the London robusta coffee market and globally. The nation’s General Statistics Office reported a 17.5% year-over-year increase in coffee exports for 2025, reaching 1.58 million metric tons, underscoring the robust availability from the world’s leading robusta producer. This supply abundance stands in contrast to the tighter conditions that prevailed in late 2024, when coffee prices had climbed to four-week highs on the back of Brazil’s drought concerns.

Brazil’s Production Outlook and Inventory Dynamics

Brazil’s arabica output trajectory continues to favor abundant supplies. In early December, the Brazilian crop forecasting agency Conab raised its 2025 harvest estimate by 2.4% to 56.54 million bags, compared to the September projection of 55.20 million bags. This upward revision suggests ample arabica availability in the coming year, limiting pricing support.

Inventory levels have demonstrated some stabilization after volatility in late 2024. ICE arabica stocks reached a 1.75-year low of 398,645 bags in November before recovering to 461,829 bags by mid-January—a 2.5-month high. Similarly, robusta inventories have rebounded from December lows to five-week highs, indicating improved availability across both coffee types.

U.S. Import Dynamics and Tariff Aftermath

U.S. coffee import patterns reflect the lingering impact of previous tariff policies on Brazilian shipments. During the August-October period when tariffs were in effect, U.S. Brazilian coffee imports plummeted 52% year-over-year, totaling 983,970 bags. Although tariff measures have since been reduced, U.S. inventory positions remain constrained, limiting near-term import recovery despite lower duties.

Production Forecasts Point to Record Global Output

The medium-term supply outlook remains decidedly bearish for prices. Vietnam’s 2025/26 coffee production is projected to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a four-year production high. The Vietnam Coffee and Cocoa Association anticipates output could surge an additional 10% if favorable weather persists, further bolstering robusta availability.

On the global scale, the USDA Foreign Agriculture Service (FAS) released forecasts on December 18 projecting 2025/26 worldwide coffee production at a record 178.848 million bags—a 2% year-over-year increase. This aggregate masks significant compositional shifts: arabica output is expected to contract 4.7% to 95.515 million bags, while robusta production surges 10.9% to 83.333 million bags. Brazil’s harvest is anticipated to decline 3.1% to 63 million bags, while Vietnam’s output is forecast to jump 6.2% to 30.8 million bags, the highest in four years.

Inventory Contraction Offers Limited Price Support

Signs of tightening global stocks provide modest support amidst the broader bearish supply narrative. The International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October through September) edged down 0.3% year-over-year to 138.658 million bags. However, ending stocks for the 2025/26 season are predicted to fall only 5.4% to 20.148 million bags, suggesting ample supplies despite moderate drawdowns.

The combination of near-term weather relief in Brazil, record projected global output, Vietnam’s robust production gains, and emerging robusta market strength through the London robusta coffee market all point toward continued price pressures in the quarters ahead.