Climate Forecasts Reshape the Coffee Market: Between Relief and Pressure

Weather forecasts predicting rain in Brazil’s central region over the coming days have reshaped the international coffee market landscape. Arabica coffee contracts for March (KCH26) fell sharply by 3.41%, while Robusta futures (RMH26) declined by 1.02%. Beyond the relief provided by the rainfall forecast, other factors are exerting pressure on the global prices of the world’s most consumed bean.

Strong Dollar Counteracts Climate Improvement

The US dollar’s appreciation to four-week highs has limited the potential for a price recovery in coffee. This strength of the US currency puts significant pressure on all commodities, including coffee, which is mainly traded in dollars on international markets. The temporary relief from the rain forecasts in Minas Gerais, Brazil’s main Arabica-producing region, has been moderated by the rising US dollar.

Record Production Projections in Vietnam

Vietnam, the world’s leading Robusta producer, is significantly expanding its supply capacity. According to Vietnam’s National Statistics Office, coffee exports for 2025 have increased by 17.5% year-over-year, reaching 1.58 million metric tons. The expectations for the 2025/26 harvest are even more ambitious: forecasts suggest a 6% increase to 1.76 million metric tons (29.4 million bags), the highest in four years. The Vietnam Coffee and Cocoa Association anticipates that with favorable weather conditions, production could grow by an additional 10%.

This increase in Vietnamese supply is exerting downward pressure on global Robusta prices, partially offsetting supportive factors in other market segments.

Inventory Data: Limited but Present Support

Inventory levels monitored by the Intercontinental Exchange (ICE) show a mixed picture. Arabica stocks reached a 1.75-year low in November but later recovered. Robusta stock levels followed a similar pattern: recent declines followed by recovery. Although these low levels provide some price support, the subsequent increase in stocks limits their ability to sustain a lasting rebound.

Global Production Expansion: USDA Projections

USDA Foreign Agricultural Service projections for the 2025/26 cycle indicate a relatively abundant scenario. Global coffee production is expected to reach 178.848 million bags, a 2% increase year-over-year. While Arabica production will decrease by 4.7%, Robusta will compensate with a 10.9% increase.

Despite favorable rainfall forecasts, Brazil is expected to reduce its production by 3.1% to 63 million bags in 2025/26, according to USDA projections. In contrast, Vietnam is projected to increase its output by 6.2% to 30.8 million bags, solidifying its position as the largest Robusta producer.

The End Inventory Enigma: Sustainability or Decline?

End stocks for 2025/26 are forecasted to fall by 5.4% to 20.148 million bags, below the 21.307 million bags in 2024/25. This decline in global reserves contrasts with the record production outlook, creating a complex scenario: as supply grows, available stocks decrease, which could maintain some price tension in the long term.

Expert forecasts suggest that the coffee market will remain in a delicate balance between pressure factors (expanding supply, strong dollar) and supportive elements (tight inventories, resilient global demand).