March arabica coffee (KCH26) on Monday closed up +2.05 (+0.57%).  March ICE robusta coffee (RMH26) closed down -36 (-0.91%).

Coffee prices settled mixed on Monday, with robusta falling to a 1-week low.  Below-average rainfall in Brazil, the world's largest arabica producer, is supporting arabica coffee.  Somar Meteorologia reported Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received 47.9 mm of rain during the week ended January 2, or 67% of the historical average.   Also, strength in the Brazilian real is supportive for arabica coffee.  The real (^USDBRL) climbed to a 3-week high against the dollar on Monday, discouraging export sales from Brazil's coffee producers.

Robusta coffee is under pressure as soaring coffee exports from Vietnam, the world's largest robusta producer, ease supply concerns.  Vietnam's National Statistics Office reported on Monday that Vietnam's 2025 coffee exports jumped +17.5% y/ to 1.58 MMT.  

Shrinking ICE coffee inventories are bullish for prices.  ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags on November 20, although they recovered to a 2-month high of 456,477 bags on December 24.  ICE robusta coffee inventories fell to a 1-year low of 4,012 lots on December 10 but recovered to a 4-week high of 4,278 lots on December 23 and 24.

American buyers shunned Brazilian coffee purchases due to previous high tariffs on US imports from Brazil.  Those US tariffs have since been cut, but US coffee inventories are still tight.  US purchases of Brazilian coffee from August through October, during which President Trump's tariffs were in effect, dropped by 52% from the same period last year to 983,970 bags.

The outlook for ample coffee supplies is weighing on prices.  On December 4, Conab, Brazil's crop forecasting agency, raised its total Brazil 2025 coffee production estimate by 2.4% to 56.54 million bags, from a September estimate of 55.20 million bags.  

Increased Vietnamese coffee supplies are bearish for prices.  Vietnam's 2025/26 coffee production is projected to climb +6% y/y to 1.76 MMT, or 29.4 million bags, a 4-year high.  Also, the Vietnam Coffee and Cocoa Association (Vicofa) said on October 24 that Vietnam's coffee output in 2025/26 will be 10% higher than the previous crop year if weather conditions remain favorable.   Vietnam is the world's largest producer of robusta coffee.

Signs of tighter global coffee supplies are supportive of prices, as the International Coffee Organization (ICO) on November 7 reported that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% y/y to 138.658 million bags.

The USDA's Foreign Agriculture Service (FAS) bi-annual report on December 18 projected that world coffee production in 2025/26 will increase by +2.0% y/y to a record 178.848 million bags, with a -4.7% decrease in arabica production to 95.515 million bags and a +10.9% increase in robusta production to 83.333 million bags.  FAS forecasted that Brazil's 2025/26 coffee production will decline by -3.1% y/y to 63 million bags and that Vietnam's 2025/26 coffee output will rise by 6.2% y/y to a 4-year high of 30.8 million bags.  FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.