Morning Coffee Quotes Show Mixed Signals Amid Dollar Strength and Global Supply Shifts

The coffee market painted a complex picture on Thursday as conflicting forces battled for direction. March arabica coffee futures retreated -3.10 points, closing down -0.83%, while March ICE robusta coffee slipped -11 points lower at -0.28%. The pullback came despite an early rally that had pushed arabica to a 4-week high, only to be undermined by a stronger US dollar reaching its own 4-week peak, triggering liquidation across the futures complex.

Supply Pressures and Weather Concerns Shape Market Direction

The morning coffee quotes revealed deeper structural forces at play beyond daily price movements. Brazil’s arabica production outlook has shifted markedly, with Conab raising its 2025 production estimate by 2.4% to 56.54 million bags in December, up from September’s 55.20 million projection. Yet weather worries continue to linger—Somar Meteorologia reported that Minas Gerais, home to the world’s largest arabica concentration, received only 47.9mm of rain in the week ending January 2, representing just 67% of historical averages.

Vietnam’s robusta market tells a different story. The country’s 2025 coffee exports jumped 17.5% year-over-year to 1.58 million metric tons according to Vietnam’s National Statistics Office, flooding global markets with supply. USDA projections suggest Vietnam’s 2025/26 output will climb 6.2% year-over-year to 30.8 million bags, a 4-year high, while total Vietnamese production is expected to reach 1.76 million metric tons if favorable weather persists.

Inventory Dynamics and Their Market Implications

Today’s coffee quotes reflected the complexities of global stock levels. ICE arabica inventories, while recovering to 461,829 bags on Wednesday, remain historically depressed after hitting a 1.75-year low of 398,645 bags in November. Similarly, robusta stocks have stabilized around recent levels but continue signaling constrained availability compared to historical norms.

The tariff saga continues casting shadows over American demand. US purchases of Brazilian coffee from August through October, when Trump-era tariffs were active, plummeted 52% from year-ago levels to 983,970 bags. Though tariffs have since been reduced, American inventories remain tight, limiting near-term import appetite.

The Broader Production Outlook

USDA’s December 18 forecast painted a mixed picture for the 2025/26 season. Global coffee production is expected to climb 2.0% year-over-year to a record 178.848 million bags, but the composition matters significantly: arabica production is set to decline 4.7% to 95.515 million bags while robusta surges 10.9% to 83.333 million bags. Ending stocks are projected to contract 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25.

The International Coffee Organization’s November 7 report added nuance to the supply picture, noting that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags, suggesting demand remains cautious despite production strength. This backdrop explains why morning coffee quotes continue oscillating between supply concerns and demand uncertainties, with currency movements serving as the catalyst for tactical repricing.