Coffee on Sale: Market Digests Global Production Surge

May arabica coffee futures closed Wednesday down 0.65 points (-0.23%) while May ICE robusta climbed 63 points (+1.73%), as the coffee market stabilized after weeks of selling pressure. The mixed price action reflects a market struggling to find direction amid conflicting signals between record production forecasts and supportive currency movements. Global coffee fundamentals have shifted dramatically, with prices for both varieties reaching multi-month lows—arabica touched a 15-month bottom and robusta fell to a 6.5-month low—as the global supply picture brightens considerably.

Global Supply Outlook Shifts with Record Crop Forecasts

The primary driver weighing on coffee prices is the dramatic upward revision to global production estimates. Brazil’s crop forecasting agency Conab reported on February 5 that the country’s 2026 coffee production will surge 17.2% year-over-year to an unprecedented 66.2 million bags. Within this total, arabica output is projected to jump 23.2% to 44.1 million bags, while robusta production will climb 6.3% to 22.1 million bags. These record forecasts reflect improved growing conditions across Brazil’s major coffee regions.

Vietnam, the world’s largest robusta producer, is another headwind for prices. The country’s January coffee exports soared 38.3% year-over-year to 198,000 metric tons, signaling robust supply flowing into global markets. More concerning for prices is Vietnam’s full-year 2025 coffee production, which jumped 17.5% year-over-year to 1.58 million metric tons. Looking ahead, Vietnam’s 2025/26 coffee output is projected to climb 6% to a four-year high of 1.76 million metric tons (29.4 million bags), adding substantial robusta supplies to global inventory.

At the global level, the USDA’s Foreign Agriculture Service forecasted that world coffee production in 2025/26 will increase 2.0% year-over-year to a record 178.848 million bags. However, this masks a significant shift: arabica production is expected to decline 4.7% to 95.515 million bags, while robusta production will surge 10.9% to 83.333 million bags. The FAS anticipates that ending stocks for 2025/26 will fall 5.4% to 20.148 million bags from 21.307 million bags in 2024/25, though recovery in near-term inventories has already begun.

Support From Currency Strength and Regional Production Changes

Several factors are attempting to support coffee prices against the bearish supply outlook. The Brazilian real rallied to a fresh 1.75-year high against the dollar on Wednesday, making Brazilian coffee exports less attractive in foreign currency terms and thereby reducing export incentives for producers. This currency strength has limited the magnitude of price losses in recent trading.

Recent rainfall across Brazil’s major coffee-growing regions has also been supportive of production but neutral-to-negative for prices. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing area, received 62.8 mm of rain during the week ended February 13—or 138% of the historical average. This abundant moisture ensures strong crop development.

On the positive side for arabica prices specifically, Colombia’s coffee output has weakened significantly. The National Federation of Coffee Growers reported that January coffee production fell 34% year-over-year to 893,000 bags, providing some constructive support. Additionally, Brazil’s Trade Ministry reported on February 5 that January coffee exports fell 42.4% year-over-year to 141,000 metric tons, suggesting tightness in near-term export availability.

What to Watch: Inventory Recovery and Market Fundamentals

The recovery in ICE-monitored coffee inventories represents a concerning trend for prices. Arabica inventories, which hit a 1.75-year low of 396,513 bags on November 18, have recovered to a 3.75-month high of 461,829 bags as of January 7. Similarly, robusta inventories fell to a 14-month low of 4,012 lots on December 10 but have rebounded to a 2.75-month high of 4,662 lots as of January 26. This inventory recovery, combined with rising production forecasts, is creating headwinds for further price appreciation.

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year (October-September) fell just 0.3% year-over-year to 138.658 million bags, indicating relatively stable export flows despite price pressures. Market participants are closely monitoring whether the combination of record production forecasts, inventory recovery, and rising exports will continue to weigh on both arabica and robusta prices in the coming months.