## Brazil's Drought Pressure Keeps Coffee Prices at Multi-Week Highs Today

Today coffee price movements reflect growing concerns over global bean supplies. Arabica futures for March delivery have climbed 0.17%, while robusta contracts rose 0.48%, with arabica reaching its highest point in four weeks. This upward trajectory stems from multiple pressures across production regions and market fundamentals.

### Rainfall Shortage Threatens Arabica Supplies

The primary driver behind current coffee price strength is inadequate precipitation in Brazil's core growing regions. Minas Gerais, which supplies the majority of the world's arabica beans, received only 47.9 mm of rainfall during the week ending January 2—representing just 67% of its seasonal norm. This weather deficit is compounding supply concerns at a critical juncture for global coffee inventories.

Brazil's currency has also turned into a market factor. The real strengthened to a one-month peak against the dollar, reducing the competitiveness of Brazilian coffee exports internationally and providing additional support to arabica valuations.

### Vietnam's Robusta Surge Creates Mixed Signals

Vietnam, the world's dominant robusta producer, has been rapidly expanding shipments. The country's coffee exports jumped 17.5% year-over-year in 2025, reaching 1.58 million metric tons according to its National Statistics Office. Production forecasts for 2025/26 now suggest a 6% increase to 1.76 million metric tons (29.4 million bags)—the highest output in four years. The Vietnam Coffee and Cocoa Association projects potential production could climb another 10% if favorable weather persists.

This increased robusta supply is preventing more dramatic price rallies, though robusta gains remain modest compared to arabica's momentum.

### Warehouse Inventory Dynamics

Warehouse stock levels are sending conflicting signals. Arabica inventory at ICE-monitored facilities dropped to a 1.75-year low of 398,645 bags in November before recovering to 461,829 bags by late December—still constrained. Robusta stocks bottomed at 4,012 lots in early December before climbing to 4,278 lots by year-end. These tighter-than-normal inventory cushions provide price support despite rising global production forecasts.

### US Import Disruptions Add to the Mix

US coffee inventories remain significantly depleted following tariff-related import disruptions. Between August and October, when elevated tariffs on Brazilian coffee were in effect, US imports from Brazil plummeted 52% compared to the prior year, totaling just 983,970 bags. Though tariffs have been scaled back, import volumes have not fully recovered, leaving the world's largest coffee-consuming nation with limited stock buffers.

### Production Growth vs. Demand Realities

Brazil's crop forecasting agency Conab raised its 2025 harvest estimate by 2.4% in December, now projecting 56.54 million bags versus 55.20 million bags forecast in September. The USDA projects global coffee production for 2025/26 will rise 2% to a record 178.848 million bags—but this masks a crucial shift. Arabica output is expected to fall 4.7% to 95.515 million bags, while robusta surges 10.9% to 83.333 million bags.

Brazil specifically faces a headwind, with its 2025 production forecast revised downward 3.1% to 63 million bags, while Vietnam's output is anticipated to jump 6.2% to 30.8 million bags.

### The Global Supply Picture

The International Coffee Organization reported that worldwide coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags. Looking ahead, ending global stocks for 2025/26 are projected to decline 5.4% to 20.148 million bags from 21.307 million bags in the prior season.

These structural tightness indicators suggest that today coffee price strength may persist despite abundant near-term production forecasts. The transition toward robusta dominance, combined with reduced arabica availability and lower US import buffers, creates an environment where weather events in Brazil continue commanding market attention and supporting valuations.