Coffee Price Today Climbs Higher as Brazilian Currency Strength Squeezes Supplies

Coffee futures posted robust gains today, with March arabica contracts advancing 3.26% and March robusta futures climbing 2.48%, marking significant momentum in the commodities complex. The rally reflects a confluence of supply constraints and currency dynamics that have tightened global coffee inventories while limiting export volumes from the world’s largest arabica producer.

Currency Headwinds Dampen Brazilian Coffee Exports

The strength of the Brazilian real against the US dollar has emerged as a critical factor reshaping coffee market dynamics today. With the real rallying to its highest level in 20 months, Brazilian coffee producers face reduced incentives to sell internationally, as their export revenues translate to fewer reais when denominated in the weakening dollar. This currency appreciation has cascading effects across the coffee supply chain.

Brazil’s December green coffee exports reflect the export disincentive created by real strength. Total shipments contracted 18.4% compared to the prior year to 2.86 million bags, with arabica coffee exports declining 10% year-over-year to 2.6 million bags and robusta shipments down 61% year-over-year to 222,147 bags according to data from Cecafe, Brazil’s coffee exporters association.

Weather and Production Challenges Bolster Market Strength

Below-average precipitation in Brazil’s primary arabica-producing regions has provided additional support to coffee prices today. Minas Gerais, which represents the country’s largest arabica coffee growing area, received just 33.9mm of rainfall during the week ending January 16—representing only 53% of the long-term historical average. Such moisture deficits raise concerns about crop development and potential yield impacts.

These weather pressures occur against the backdrop of Brazil’s substantial production base. The Brazilian crop forecasting agency Conab raised its 2025 production estimate by 2.4% to 56.54 million bags in December, suggesting ample supplies despite near-term weather challenges. The USDA’s Foreign Agriculture Service projects Brazil’s 2025/26 coffee output will decline 3.1% year-over-year to 63 million bags, indicating the market is already pricing in some production headwinds.

Global Inventory Recovery and Supply Outlook

Recent trends in monitored coffee inventories present mixed signals for coffee prices. ICE arabica coffee stocks declined to 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 fell to a 1-year low of 4,012 lots in December but subsequently recovered to 4,609 lots, suggesting near-term inventory accumulation in certified warehouse stocks.

Vietnam’s robust production trajectory stands in contrast to Brazilian challenges and weighs on robusta coffee prices specifically. Vietnam’s 2025 coffee exports surged 17.5% year-over-year to 1.58 million metric tons, while 2025/26 production is projected to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags)—a 4-year production high. The Vietnam Coffee and Cocoa Association indicated that 2025/26 output could exceed the prior crop year by 10% if weather conditions prove favorable.

On a global basis, the International Coffee Organization reported that worldwide coffee exports for the current marketing year (October-September) declined 0.3% year-over-year to 138.658 million bags, pointing to modest export constraints offsetting robust supply growth from Vietnam and several other origins.

Market Projections and Price Implications

The USDA Foreign Agriculture Service’s December assessment projects world coffee production in 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags. However, this global expansion masks important compositional shifts: arabica production is forecast to decline 4.7% year-over-year to 95.515 million bags while robusta production expands 10.9% year-over-year to 83.333 million bags. The projected rise in robusta supplies from Vietnam reflects the divergent supply dynamics between the two coffee types.

Global ending stocks for 2025/26 are expected to fall 5.4% from the prior year to 20.148 million bags, suggesting that demand remains robust enough to absorb the anticipated supply growth. This inventory drawdown provides structural support to coffee prices today and suggests that supply tightness at the global level may persist despite Vietnam’s production surge. The interplay between Brazilian supply constraints, currency appreciation effects, and robust demand should continue to underpin coffee price dynamics in the near term.