Dubai – Qahwa World
Coffee markets are seeing an upward shift in prices, driven by weather events in key production regions and tightening global supplies.
March arabica futures rose 1.26%, while ICE robusta for January had previously gained 1.06% before the holiday closure. The Brazilian coffee belt is experiencing a heatwave forecasted to last through Monday, putting pressure on crops and supporting prices.
Additional factors are influencing the market. In Indonesia, recent floods have affected roughly one-third of northern Sumatra’s arabica plantations, potentially cutting the nation’s coffee exports by up to 15% in the 2025-26 season. Robusta production has been less impacted. Indonesia remains the third-largest robusta producer worldwide.
Meanwhile, Brazil’s Minas Gerais region received rainfall during the week ending December 19 that was below average, according to Somar Meteorologia. Reduced precipitation in key growing areas can add bullish pressure on arabica coffee.
Coffee inventories also play a role in market dynamics. ICE-tracked arabica stocks hit a 1.75-year low of 398,645 bags in November before rising to 456,477 bags recently. Robust a inventories similarly fell to near 12-month lows before modest recovery.
US demand for Brazilian coffee remains restrained. Tariffs previously imposed on imports led to a 52% drop in purchases from August to October compared to the previous year. Although tariffs have since eased, US stock levels remain limited.
On the supply side, Brazil’s national crop agency Conab raised its 2025 production estimate to 56.54 million bags, up from 55.20 million in September, signaling an ample supply outlook.
Robusta coffee faces downward pressure amid expectations of strong output. Vietnam’s coffee exports surged 39% year-on-year in November and 14.8% from January to November, according to government statistics. Total production in 2025/26 is projected to rise 6% to 1.76 million metric tons, a four-year high.
Globally, the International Coffee Organization reported a slight decline of 0.3% in coffee exports for the current marketing year, supporting price stability. The USDA projects world coffee output for 2025/26 to reach a record 178.85 million bags, with arabica falling 4.7% and robusta rising 10.9%. Brazil’s production is expected to decrease by 3.1%, while Vietnam’s output could rise 6.2% to a four-year high. Ending stocks are projected to decline by 5.4% to 20.15 million bags.
Overall, a combination of adverse weather in Brazil, flooding in Indonesia, and fluctuating inventories is contributing to upward momentum in coffee prices, even as abundant output in some regions, particularly Vietnam, applies downward pressure on robusta markets.
