Brazilian Coffee Under Pressure: What's Really Dragging Prices Down?

The coffee market took a hit on Friday as both arabica and robusta contracts closed in the red—March arabica slid -1.48% while January robusta fell -0.16%. But the real story isn’t just about price weakness; it’s about the structural forces reshaping the global coffee trade.

The Brazilian Real Factor: A Double-Edged Sword

The Brazilian real tumbled to a 7-week low against the dollar Friday, and that’s actually a problem for coffee prices. When a country’s currency weakens, it sounds counterintuitive, but here’s what’s happening: Brazilian coffee producers are rushing to lock in export sales while the real is down, flooding the market with supply and pushing prices lower. This currency-driven selling pressure is a key headwind for arabica, the premium coffee variety that Brazil dominates.

Supply Explosion on the Horizon

Brazil’s crop forecasting agency Conab just raised its 2025 coffee production estimate by 2.4%—now sitting at 56.54 million bags versus the September forecast of 55.20 million bags. Meanwhile, Vietnam, the world’s largest robusta producer, is also ramping up. The Vietnam Coffee and Cocoa Association reported that 10% of Vietnam’s robusta harvest is already done, with drier weather expected to accelerate the pace this month. Vietnam’s coffee exports surged 13.4% year-over-year through October, hitting 1.31 million metric tons, and production for 2025/26 is projected to climb another 6% to 1.76 million metric tons.

This supply abundance is exactly what bearish traders want to see. The outlook for ample coffee supplies just got worse last week when the European Parliament approved a 1-year delay to the EUDR deforestation law. That means EU countries can keep importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring—basically keeping coffee supply channels wide open.

What’s Supporting Prices? Not Much Right Now

ICE arabica inventories did fall to a 1.75-year low of 398,645 bags on November 20, which would normally be bullish. But they’ve since recovered to 426,523 bags by Friday. US tariffs on Brazilian coffee imports have tightened domestic supplies—American coffee purchases from Brazil dropped 52% from August-October versus last year—but that’s a US-specific issue that hasn’t filtered into global pricing yet.

Robusta inventories also hit an 11.25-month low at 4,049 lots, another mild positive. And Brazil’s largest arabica-growing region, Minas Gerais, only got 20.4mm of rain last week versus a historical average of 52.3mm, which could eventually support prices if drought conditions persist.

The Forecast That’s Haunting Traders

StoneX just threw another bullish supply projection at the market: Brazil will produce 70.7 million bags in the 2026/27 marketing year, with arabica production climbing 29% year-over-year to 47.2 million bags. The USDA’s Foreign Agriculture Service projects global production hitting a record 178.68 million bags in 2025/26—robusta surging 7.9% and arabica dipping 1.7%.

Ending stocks are also expected to pile up, projected to climb 4.9% to 22.819 million bags. When traders see these kinds of supply forecasts, they don’t buy coffee; they short it.

The Bottom Line for Brazilian Coffee

The combination of a weakening Brazilian real encouraging export sales, surging supply from both Brazil and Vietnam, a delayed EU deforestation law, and bloated production forecasts has created a perfect storm of bearish pressure. The modest support from tightening inventories and dry weather in Minas Gerais just isn’t enough to offset the supply avalanche heading our way. For coffee traders, this looks like a market where supply wins the tug-of-war against demand—at least for now.