Robusta Coffee Rebounds as Arabica Strength Signals Shifting Market Dynamics

Price Action Reflects Supply Tightness and Currency Pressures

Coffee futures markets are displaying distinct momentum across varieties. March arabica contracts (KCH26) have gained 13.30 points—a 3.7% advance—while robusta coffee futures (RMH26) have added 63 points, representing a 1.61% uptick. Arabica has touched its highest level in four weeks, signaling persistent buying interest despite broader commodity headwinds.

The price rally stems from multiple converging factors. Brazil’s Minas Gerais region, which accounts for the bulk of global arabica production, experienced rainfall of just 47.9 mm in the week ending January 2—only 67% of the historical average according to Somar Meteorologia. Concurrently, a stronger Brazilian real has reached one-month highs against the US dollar, creating disincentives for local producers to export, thereby tightening supply at critical junctures.

Vietnam’s Export Surge Creates Divergence Between Robusta and Arabica

Where arabica draws support from weather woes and currency dynamics, robusta coffee faces headwinds from robust competing supplies. Vietnam’s National Statistics Office reported that 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, reinforcing its position as the world’s largest robusta supplier. This volume increase has tempered gains in the robusta segment even as global demand remains resilient.

Vietnam’s production trajectory compounds the robusta supply picture. Output for the 2025/26 season is projected to rise 6% to 1.76 million metric tons (29.4 million bags), marking a four-year high. The Vietnam Coffee and Cocoa Association indicated in October that favorable weather could push the next harvest 10% higher than the prior season.

ICE Inventory Metrics Suggest Structural Tightness

Storage levels at ICE exchanges have fluctuated significantly, revealing underlying supply concerns. Arabica inventories plunged to a 1.75-year low of 398,645 bags as of November 20, though they subsequently recovered to 456,477 bags by December 24. Similarly, robusta coffee stockpiles hit a one-year low of 4,012 lots on December 10 before rebounding to 4,278 lots by late December. These dynamics indicate that despite seasonal rebuilding, inventory buffers remain constrained relative to historical norms.

Brazil’s Production Outlook Tempers Longer-Term Price Support

Brazil’s crop forecasting agency Conab revised its 2025 harvest estimate upward by 2.4% to 56.54 million bags in early December, up from the September projection of 55.20 million bags. However, the USDA’s Foreign Agriculture Service projected a 3.1% decline in Brazil’s output to 63 million bags for 2025/26, introducing conflicting guidance on the region’s supply capacity. Overall, global arabica production is anticipated to contract 4.7% to 95.515 million bags, while robusta coffee output is set to expand 10.9% to 83.333 million bags.

Trade Disruptions and Ending Inventory Pressures

US import patterns reveal lasting impacts from tariff cycles. Between August and October 2024, when tariffs on Brazilian coffee were in effect, American purchases fell 52% year-over-year to 983,970 bags. Although duties have since been reduced, US coffee inventories remain tight, supporting price levels.

At the macro level, global coffee exports for the current marketing year (October to September) declined 0.3% year-over-year to 138.658 million bags, according to the International Coffee Organization. The USDA forecasts that global ending stocks for 2025/26 will fall 5.4% to 20.148 million bags from 21.307 million bags in the prior year—a meaningful contraction that could underpin prices if production disruptions emerge.

Market Implications

The coffee complex reflects competing narratives: near-term weather-driven tightness in arabica versus structural abundance in robusta coffee supply chains. Inventory drawdowns and modest export declines suggest limited global slack, while production forecasts indicate ample supplies ahead. Traders should monitor Brazilian rainfall patterns, Vietnamese harvests, and currency movements as primary drivers of directional bias in the months ahead.