Brazilian Rain and Dollar Surge Trigger Coffee Rate Collapse Today

Coffee Prices Plummet as Weather Outlook Shifts

Today’s coffee market delivered a sharp shock to traders. March arabica futures (KCH26) nosedived 3.41%, while robusta contracts (RMH26) dropped 1.02%, marking a significant pullback from recent highs. The coffee rate today reflects two major headwinds: rainfall predictions across Brazil’s key growing regions and a strengthening U.S. dollar climbing to its highest point in four weeks.

What’s Driving the Coffee Price Decline?

The weather story tells the most compelling narrative. After weeks of drought concerns lifted arabica prices to four-week highs, meteorologists have now forecast substantial rainfall across central Brazil—the world’s largest arabica producer. Data from Somar Meteorologia showed Minas Gerais received only 67% of normal precipitation in early January, but incoming moisture has eased supply anxieties dramatically.

Currency dynamics add another layer of pressure. A surging dollar makes coffee denominated in U.S. dollars less attractive for international buyers, pushing prices lower across the board.

Vietnam’s Export Surge Weighs on Robusta

The robusta market faces additional headwinds from Southeast Asia. Vietnam, commanding the world’s robusta production, has unleashed a torrent of exports—coffee shipments surged 17.5% year-over-year in 2025 to reach 1.58 million metric tons. The Vietnam Coffee and Cocoa Association projects the 2025/26 harvest could hit a stunning 30.8 million bags (1.76 million metric tons), representing a four-year high and marking a 6-10% year-over-year jump if weather cooperates.

Global Supply Abundance Looms

Supply projections paint a landscape of abundance threatening prices. Brazil’s crop agency Conab increased its 2025 harvest estimate by 2.4% to 56.54 million bags—a substantial upward revision. On the global stage, the USDA forecasts 2025/26 coffee production reaching a record 178.848 million bags, though this masks a critical split: arabica output is expected to drop 4.7% to 95.515 million bags while robusta surges 10.9% to 83.333 million bags.

Stock Recovery Offers Limited Support

ICE inventories present a mixed picture. Arabica stocks recovered to a 2.5-month high of 461,829 bags after hitting a 1.75-year low in November, while robusta stocks bounced to five-week highs from December lows. However, these modest inventory levels provide only temporary support against the supply avalanche expected ahead.

The Tariff Impact Lingering

U.S. importers remain cautious despite tariff reductions. During the high-tariff period (August-October), Brazilian coffee imports to the United States plummeted 52% year-over-year to just 983,970 bags. Even as tariffs eased, U.S. coffee inventories remain constrained, limiting immediate demand recovery.

What’s Next for Coffee Traders?

Ending stocks for 2025/26 are projected to fall 5.4% to 20.148 million bags—a tightening that contradicts price behavior today. The real tension centers on producer geography: Brazilian arabica faces production pressure while Vietnamese robusta hits multi-year highs. This divergence will likely define coffee rate movements through the first half of 2025, with traders balancing supply concerns against currency headwinds and demand uncertainty.