Rainfall Patterns Reshape Global Coffee Valuations as Market Recalibrates

Coffee futures experienced a sharp correction this week, with March arabica sliding 2.34% and January robusta declining 2.13%, extending the previous week’s downward momentum. Arabica slipped to its lowest point in three weeks while robusta tested a four-month floor. The driving force behind this selloff traces directly to weather developments in key production zones, as rainfall quotes from meteorological agencies now form the backbone of near-term price discovery.

Weather Data Overtakes Traditional Forecasts

Brazil’s coffee-growing regions received what meteorologists classified as “intense and persistent rainfall,” a pivot that fundamentally altered supply outlook calculations. Minas Gerais, home to the bulk of Brazil’s arabica production, accumulated 79.8 mm of precipitation during the week ending December 12—representing 155% of historical average levels. This abundance of moisture has effectively neutralized earlier anxieties regarding crop stress, shifting market sentiment from supply tightness to supply abundance almost overnight. Weather forecasts and rainfall quotes have become the primary price mover in otherwise data-rich trading sessions.

Supply Expectations Reset Higher

Brazil’s crop forecasting agency, Conab, elevated its 2025 production estimate by 2.4%, now targeting 56.54 million bags compared to the previous 55.20 million-bag projection from September. Meanwhile, Vietnam’s export momentum continues accelerating, with November coffee shipments climbing 39% year-over-year to 88,000 metric tons. Cumulative January-November exports rose 14.8% year-over-year, reaching 1.398 million metric tons. Vietnam’s 2025/26 output is projected to reach 31 million bags—a four-year peak—driven by favorable climatic conditions and expansion in robusta cultivation.

Inventory Dynamics Present Mixed Signals

Though ICE arabica inventories recovered to 426,523 bags on December 5 following a 1.75-year low reached in November, robusta stocks compressed to an 11.5-month trough of 4,012 lots. This fragmented inventory picture suggests market resilience faces uneven pressure across coffee varieties. The contradiction between tightening robusta supplies and expanding arabica availability reflects the divergent production trajectories shaping each market’s fundamental outlook.

Global Trade Flows Underscore Supply Headwinds

US coffee purchases from Brazil declined 52% during the August-October window when elevated tariffs were operational, dropping to 983,970 bags. Even with tariff relief implemented subsequently, American coffee stocks remain constrained, limiting immediate demand flexibility. 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, suggesting that price declines have yet to unlock meaningful demand expansion.

Long-Term Production Trajectory Points Toward Surplus

The USDA Foreign Agriculture Service projects world coffee production reaching a record 178.68 million bags in 2025/26, representing a 2.5% year-over-year increase. Arabica output is expected to decline 1.7% to 97.022 million bags, while robusta climbs 7.9% to 81.658 million bags. Ending stocks are forecast to expand 4.9% to 22.819 million bags, reinforcing the structural oversupply narrative that continues to pressure valuations across both contract months and delivery points globally.