Global Coffee Supply Dynamics Reshape US Coffee and Arabica Futures Markets

The coffee futures market displayed mixed performance on Thursday, with arabica contracts gaining traction while robusta faced persistent headwinds. March arabica coffee advanced +1.05% to close at higher levels, whereas January robusta coffee retreated -0.26%, reflecting divergent supply narratives between the world’s two primary coffee varieties.

Brazil’s Export Decline Supports Arabica Coffee Fundamentals

A significant shift in global coffee trade emerged after Brazil’s exporter group Cecafe disclosed that November green coffee shipments contracted sharply by 27% year-over-year, totaling only 3.3 million bags. This substantial reduction in Brazilian arabica coffee exports from the world’s largest producer underpinned prices throughout the session.

The supply tightness from Brazil stems partly from weather constraints. Somar Meteorologia reported that Minas Gerais, the nation’s primary arabica coffee-growing region, experienced only 11 mm of precipitation during the week ending December 5—representing merely 17% of the long-term average. Such moisture deficiency continues to support the pricing outlook for arabica coffee in international futures markets.

These supply concerns prompted Brazil’s crop forecasting agency, Conab, to elevate its 2025 coffee production estimate by 2.4%, reaching 56.54 million bags, yet market participants remain cautious given weather variability and export pipeline constraints.

Vietnam’s Robusta Coffee Abundance Weighs on Prices

In contrast to arabica’s firmer trajectory, robusta coffee continues experiencing pressure as Vietnam’s National Statistics Office revealed robust export momentum. November coffee shipments from Vietnam surged 39% year-over-year to 88,000 MT, while cumulative January-through-November exports climbed 14.8% year-over-year to 1.398 million MT.

Vietnam, as the world’s leading robusta coffee producer, projects even greater output ahead. Industry projections suggest the nation’s 2025/26 coffee production will climb 6% annually to 1.76 million MT—equivalent to approximately 29.4 million bags—marking a four-year production peak. Such expansive supplies act as a dampening force on global robusta coffee valuations.

US Coffee Demand Recovery Amid Tariff Resolution

A noteworthy development in US coffee market dynamics involves the normalization of trade relationships with Brazil. During President Trump’s tariff period from August through October, American coffee buyers substantially reduced Brazilian coffee purchases, with volumes plummeting 52% compared to the prior-year period to just 983,970 bags.

With those tariffs subsequently removed, US coffee importers face an opportunity to rebuild inventory positions. However, current US coffee supply levels remain constrained relative to historical norms, suggesting potential for increased Brazilian arabica coffee procurement as traders rebalance positions.

Global Supply-Demand Balance Points to Varied Outlooks

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—signaling a tightening export environment.

Looking ahead to 2025/26, the USDA’s Foreign Agriculture Service projects world coffee production will expand 2.5% annually to a record 178.68 million bags. However, this aggregate growth masks compositional shifts: arabica coffee production is forecast to contract 1.7% to 97.022 million bags, while robusta output increases 7.9% to 81.658 million bags. Brazil’s production is expected to grow modestly by 0.5% to 65 million bags, whereas Vietnam’s output is projected to rise 6.9% to reach 31 million bags.

Ending global coffee inventories are anticipated to climb 4.9% to 22.819 million bags for the 2025/26 season, compared to 21.752 million bags in 2024/25.

Market Technical Indicators and Regulatory Influences

ICE-monitored arabica coffee inventory levels have exhibited volatility, declining to a 1.75-year low of 398,645 bags on November 20 before recovering to 426,523 bags last Friday. Meanwhile, ICE robusta inventories compressed to an 11.5-month low of 4,012 lots on Wednesday, underscoring supply constraints across both arabica coffee and robusta segments.

A regulatory development—the one-year delay to the EU’s deforestation regulation (EUDR) approved by the European Parliament on November 26—paradoxically may burden coffee prices by permitting continued agricultural imports from regions experiencing deforestation. This maintains broader commodity supply flows into European markets.

The interplay between Brazil’s export constraints, Vietnam’s production expansions, US coffee demand recovery, and evolving global inventory management will likely determine arabica coffee and robusta coffee trajectories in the quarters ahead.