Brazil Weather Patterns and Rising Coffee Inventories Weigh on Global Market Prices

Coffee markets are showing weakness today, with both arabica and robusta contracts retreating as traders weigh Brazil’s seasonal rainfall forecasts against mounting inventory levels. The dual pressure highlights how supply dynamics in the world’s largest arabica-producing nation continue to shape global commodity sentiment.

Seasonal Rains in Brazil’s Key Growing Region Put Downward Pressure

March arabica coffee is trading down 0.40 cents, reflecting a 0.12% decline, while March ICE robusta coffee has fallen 0.56 cents or 1.37%. The Weather Channel’s forecast for daily showers throughout this week across Minas Gerais—Brazil’s largest and most productive arabica coffee-growing area—is weighing on prices. Recent meteorological data from Somar Meteorologia reveals that this region received 33.9 mm of rainfall during the week ending January 16, representing just 53% of historical averages. This combination of forecasted moisture and actual precipitation patterns reflects the seasonal challenges facing growers in the world’s coffee heartland.

Currency Strength and Export Dynamics Offer Limited Price Support

A notable counterweight to today’s price decline comes from the strength of Brazil’s currency. The Brazilian real rallied to a 1.5-month high against the dollar, a development that typically discourages coffee producers from rushing to export their harvest. This export reluctance supports prices by limiting supply flowing to global markets. December data from Cecafe, Brazil’s coffee exporters council, documented this dynamic clearly: the country’s total green coffee exports fell 18.4% to 2.86 million bags, with arabica shipments down 10% year-over-year to 2.6 million bags and robusta exports plummeting 61% to just 222,147 bags. Reduced export volumes from Brazil mean less coffee hitting international markets, a positive factor amid broader supply concerns.

Inventory Rebounds Signal Ample Supply Availability

The recovery in ICE-monitored coffee inventories is the primary bearish factor pressuring prices today. Arabica coffee stocks, which had declined to a 1.75-year low of 398,645 bags in November, have since rebounded to a 2.5-month high of 461,829 bags. Similarly, robusta inventories, which fell to a 1-year low of 4,012 lots in December, have recovered to a 1.75-month high of 4,532 lots. This restocking signals that despite recent production concerns and weather variability, the global market maintains adequate supplies to meet current demand.

Brazil Production Forecasts and Global Output Outlook

Brazil’s domestic production outlook remains a critical variable for price direction. Conab, Brazil’s official crop forecasting agency, raised its 2025 coffee production estimate by 2.4% in December to reach 56.54 million bags, up from the September projection of 55.20 million bags. Looking ahead to the 2025/26 season, the USDA’s Foreign Agriculture Service forecasts that Brazil’s output will decline 3.1% year-over-year to 63 million bags—potentially providing some underlying support to prices if these projections materialize.

Vietnam’s Robusta Surge Adds to Global Supply Pressure

Vietnam, the world’s largest robusta coffee producer, is contributing significantly to the oversupply picture. The country’s 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons according to Vietnam’s National Statistics Office. More concerningly for price bulls, Vietnam’s 2025/26 production is projected to climb 6% to 1.76 million metric tons, or 29.4 million bags—a four-year high. The Vietnam Coffee and Cocoa Association indicated that output could climb an additional 10% if favorable weather conditions persist, further expanding the global robusta supply base.

Global Market Balance Points to Near-Term Price Pressures

Broader supply indicators suggest that coffee markets will struggle for upward momentum in coming weeks. The International Coffee Organization reported that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags. However, the USDA’s most recent projections paint a picture of abundant supplies ahead. The agency forecasts world coffee production in 2025/26 will increase 2.0% to a record 178.848 million bags. While arabica production is expected to decline 4.7% to 95.515 million bags, robusta output is projected to surge 10.9% to 83.333 million bags. Global ending stocks for the season are forecast to fall 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25, suggesting that supply remains ample relative to demand.

The current price action—with Brazil facing seasonal rainfall and inventories rebounding—reflects the challenging environment for coffee bulls. While currency dynamics and reduced Brazilian exports provide some price support, the combination of adequate global stockpiles and expanding Vietnamese production suggests that near-term momentum may favor the bearish side of the market.