Arabica Coffee Finds Support on Reduced Brazil Coffee Exports

Coffee prices settled mixed as March arabica rose 0.96% while ICE January robusta slipped 0.17%, with arabica supported by a sharp drop in Brazil’s November green exports (-27% y/y to 3.3m bags) and below-normal rains in Minas Gerais (11 mm, 17% of average), and robusta pressured by ample Vietnamese supply and rising production forecasts (Vietnam Nov exports +39% y/y to 88,000 MT; 2025/26 output projected +6% y/y to ~1.76 MMT). Supply data are mixed: Conab lifted Brazil’s 2025 crop to 56.54m bags, ICE-monitored arabica inventories hit a 1.75-year low (398,645 bags) while robusta stocks fell to an 11.5-month low (4,012 lots), yet longer-term USDA/FAS forecasts call for record global production in 2025/26 (+2.5% y/y to 178.68m bags) and higher ending stocks (+4.9%), and the EU’s one-year delay to the deforestation law should keep flows intact. The net implication for traders and allocators is continued near-term volatility with upside risk from Brazilian weather and tight ICE arabica balances, but a structurally bearish tilt for prices over 2025/26 as robusta supply growth and rising global stocks temper rallies.

Analysis

March arabica closed up +3.55 (+0.96%) while January ICE robusta closed down -7 (-0.17%), reflecting divergent supply signals for the two contracts. Arabica received near-term support from a sharp fall in Brazil's November green exports (-27% y/y to 3.3 million bags) and below-normal precipitation in Minas Gerais (11 mm, 17% of historical average), and ICE-monitored arabica inventories touched a 1.75-year low of 398,645 bags before recovering to 426,523 bags.

Robusta is under pressure as Vietnamese supply indicators point higher: November exports jumped +39% y/y to 88,000 MT and Jan-Nov exports rose +14.8% to 1.398 MMT, while Vietnam's 2025/26 output is projected to climb ~6% y/y to 1.76 MMT. Longer-run bearish forces include USDA/FAS forecasts for record 2025/26 world coffee production (+2.5% y/y to 178.68 million bags), a +7.9% rise in robusta output to 81.658 million bags and a +4.9% increase in ending stocks to 22.819 million bags.

Policy and trade factors add nuance: the EU's one-year delay to the EUDR keeps imports flowing and US tariffs that previously cut US purchases (down 52% Aug–Oct to 983,970 bags) have been dropped, leaving US inventories tight. The net implication is continued short-term volatility with upside risk to arabica from weather and tight ICE/US balances, but a structurally bearish tilt over 2025/26 as robusta supply growth and higher global stocks limit sustained rallies.

Key Decisions for Investors

• Monitor weekly ICE inventory prints and Minas Gerais rainfall closely and consider tactical long exposure to arabica only on confirmed weather-driven supply squeezes
• Reduce or hedge medium-term exposure to robusta-focused positions and Vietnam-supply bets given projected robusta output gains and rising global ending stocks
• Use options or other defined-risk structures to capture short-term volatility while protecting portfolios from downside if USDA/FAS forecasts of record 2025/26 production materialize, and track EUDR implementation and US import flow changes for potential market shifts