Arabica Coffee Prices Surge Due to Dry Conditions in Brazil and a Stronger Brazilian Real

Coffee Market Update: Prices Surge on Brazilian Weather and Currency Moves

March contracts for arabica coffee (KCH26) have climbed by 3.7%, gaining 13.30 points, while March ICE robusta coffee (RMH26) has risen 1.61%, up 63 points.

Arabica coffee prices have reached their highest level in four weeks, driven by drier-than-normal weather in Brazil, the leading producer of arabica beans. According to Somar Meteorologia, the Minas Gerais region—Brazil’s primary arabica-growing area—received only 47.9 mm of rainfall in the week ending January 2, which is just 67% of its usual average. Additionally, a stronger Brazilian real, which hit a one-month peak against the US dollar, is discouraging Brazilian coffee growers from exporting, further supporting arabica prices.

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Robusta coffee’s gains have been limited by a surge in exports from Vietnam, the world’s top robusta supplier. The National Statistics Office of Vietnam reported that coffee exports for 2025 increased by 17.5% year-over-year, reaching 1.58 million metric tons.

Declining inventories at ICE are providing upward pressure on coffee prices. ICE-monitored arabica stocks dropped to a 1.75-year low of 398,645 bags as of November 20, before rebounding to a two-month high of 456,477 bags by December 24. Robusta inventories tracked by ICE also hit a one-year low of 4,012 lots on December 10, but later recovered to a four-week high of 4,278 lots by December 23 and 24.

Previously, US buyers reduced their purchases of Brazilian coffee due to steep tariffs on imports from Brazil. Although these tariffs have since been reduced, US coffee inventories remain tight. Between August and October—when the tariffs were still in effect—US imports of Brazilian coffee fell by 52% compared to the same period the previous year, totaling 983,970 bags.

Expectations of abundant coffee supplies are putting downward pressure on prices. On December 4, Brazil’s crop forecasting agency Conab increased its estimate for the country’s 2025 coffee harvest by 2.4%, projecting a total of 56.54 million bags, up from the previous estimate of 55.20 million bags in September.

Rising coffee production in Vietnam is also weighing on prices. The country’s 2025/26 coffee output is forecasted to grow by 6% year-over-year to 1.76 million metric tons, or 29.4 million bags—the highest in four years. The Vietnam Coffee and Cocoa Association (Vicofa) stated on October 24 that, provided favorable weather continues, Vietnam’s 2025/26 coffee crop could be 10% larger than the previous season. Vietnam remains the world’s largest robusta coffee producer.

Global Coffee Supply Trends

Signs of tightening global coffee supplies are supporting prices. The International Coffee Organization (ICO) reported on November 7 that worldwide coffee exports for the current marketing year (October to September) declined by 0.3% year-over-year to 138.658 million bags.

The USDA’s Foreign Agriculture Service (FAS) released its bi-annual report on December 18, projecting that global coffee production for 2025/26 will reach a record 178.848 million bags, up 2% from the previous year. The report anticipates a 4.7% drop in arabica output to 95.515 million bags, while robusta production is expected to jump 10.9% to 83.333 million bags. FAS also forecasts that Brazil’s coffee production will decrease by 3.1% to 63 million bags, while Vietnam’s output is set to rise by 6.2% to a four-year high of 30.8 million bags. Ending stocks for 2025/26 are predicted to fall by 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25.