Global Coffee Supply Surge Weighs on Arabica and Robusta Futures Following EUDR Delay

Coffee futures retreated on Wednesday, with March arabica contracts closing 3.60 points lower (-0.94%) and January robusta futures declining 46 points (-1.01%). The pullback reflects renewed optimism regarding global supply availability after the European Parliament voted to postpone implementation of the deforestation regulation for one additional year, signaling that international coffee production is expected to remain robust.

Regulatory Relief Boosts Production Outlook

The European Union’s Deforestation Regulation (EUDR) faced a one-year implementation delay this week, a development that should support coffee supply chains across Africa, Indonesia, and South America where agricultural expansion often overlaps with forest clearing. This regulatory reprieve removes near-term pressure on exporting regions and suggests that international coffee flows will remain ample throughout the coming season, according to Barchart’s commodity analysis.

Weather Volatility and Production Constraints Limit Further Price Declines

Despite the bearish supply narrative, coffee prices found some support from simultaneous weather concerns threatening output in key growing regions. Brazil’s Minas Gerais, which produces the majority of the country’s arabica stock, experienced only 26.4 millimeters of rainfall during the week ended November 21—representing just 49% of the historical norm. This moisture deficit has prompted concerns about arabica quality and yields.

Vietnam’s situation presents a contrasting picture. Heavy precipitation forecasts for Dak Lak province, Vietnam’s premier robusta-growing area, threaten to postpone the harvest schedule, providing technical support for robusta values. Vietnam remains the world’s largest robusta producer.

Inventory Compression Provides Price Floor

A significant tightening of available stockpiles has counterbalanced the supply-abundant backdrop. ICE arabica inventories fell to a 1.75-year low of 398,645 bags last Thursday, while robusta storage levels dropped to a 6.25-month minimum of 4,911 lots. This contraction stems directly from U.S. tariff policies on Brazilian coffee imports, which prompted American purchasers to cancel new contracts for Brazilian coffee.

U.S. coffee purchases from Brazil during the August-October window—when tariffs took effect—collapsed 52% year-over-year to 983,970 bags. This supply tightness should persist, as Brazil supplies roughly one-third of America’s unroasted coffee demand. President Trump’s executive order exempting Brazilian food products from certain tariffs provided temporary relief, but broader trade tensions remain unresolved.

Production Forecasts Signal Record Coffee Harvests Ahead

Looking forward, major forecasters expect coffee output to expand substantially. The U.S. Department of Agriculture’s Foreign Agriculture Service projected in June that global 2025/26 production will reach 178.68 million bags—a +2.5% year-over-year gain representing record volumes. Within this total, robusta production is expected to surge +7.9% to 81.658 million bags, while arabica production will decline -1.7% to 97.022 million bags.

Brazil’s Conab reduced its 2025 arabica estimate to 35.2 million bags, down -4.9% from a May projection of 37.0 million bags. However, the global growth story remains intact, with StoneX forecasting that Brazil’s 2026/27 production will climb to 70.7 million bags—including 47.2 million arabica—representing a +29% year-over-year expansion.

Vietnam’s output trajectory proves similarly bullish. The country’s Jan-Oct 2025 coffee exports jumped +13.4% year-over-year to 1.31 million metric tons. Vietnam’s 2025/26 production is projected to rise +6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a four-year peak. The Vietnam Coffee and Cocoa Association indicated that 2025/26 output could reach 10% higher than the prior crop year if weather remains favorable.

Global Trade Dynamics and Inventory Positioning

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year declined -0.3% year-over-year to 138.658 million bags, suggesting a temporary slowdown despite ample supplies. The FAS projects ending stocks will expand +4.9% to 22.819 million bags for 2025/26 compared to 21.752 million bags the previous year.

According to Barchart’s commodity market monitoring, the interplay between regulatory relief, production growth, weather disruptions, and inventory management continues to create trading opportunities. Price direction depends on whether supply growth outpaces demand or if weather complications in critical regions sustain support levels.