Global Robusta Surge Counters Arabica Weakness as Indonesia's Flooding Reshapes Coffee Supply Chain

Coffee markets delivered mixed signals this Wednesday, with March arabica futures retreating 0.52% while January robusta contracts gained 1.06%. Behind these modest daily movements lies a complex story of competing supply dynamics and shifting buyer behavior, particularly within the US coffee market.

The Indonesian Flooding Paradox: Quality Support vs. Quantity Concerns

Indonesia’s severe flooding has emerged as the primary bullish catalyst for arabica prices. The Indonesian Coffee Exporters Association warns that the natural disaster could slash the country’s coffee exports by as much as 15% during the 2025-26 season. Northern Sumatra’s arabica plantations—accounting for roughly a third of Indonesia’s arabica acreage—have borne the brunt of the damage, though robusta crops remain relatively unscathed. As the world’s third-largest robusta producer, Indonesia’s stability matters deeply for global robusta supply chains.

Tightening Arabica Inventories Signal Market Stress

Exchange-monitored arabica stockpiles have contracted sharply, dipping to a 1.75-year low of 398,645 bags on November 20 before recovering to 456,477 bags by Wednesday. This inventory compression reflects underlying tightness in the physical arabica market. Robusta inventories followed a similar trajectory, falling to an 11.5-month nadir of 4,012 lots on December 10 before rebounding to 4,278 lots mid-week.

US Coffee Buyers Navigate Tariff Uncertainty and Brazilian Supply Shifts

The US coffee market presents a particularly telling case study. American importers slashed Brazilian coffee purchases by 52% from August through October—precisely when tariffs on Brazilian goods were in effect—purchasing just 983,970 bags compared to the prior-year period. Though Trump administration tariffs have since been reduced, US coffee inventories remain constrained, keeping prices elevated despite global abundance signals.

Meanwhile, Brazil’s crop forecasting agency Conab lifted its 2025 production estimate by 2.4% to 56.54 million bags in early December, suggesting ample supplies ahead. However, Brazil’s own USDA projection shows production declining 3.1% year-over-year to 63 million bags for 2025-26—a significant divergence warranting careful monitoring.

Vietnamese Robusta Surge Weighs on Prices

Vietnam, commanding 29% of the world’s robusta supply, is ramping up output decisively. November robusta exports jumped 39% year-over-year to 88,000 MT, with January-through-November shipments climbing 14.8% to 1.398 MMT. The Vietnam Coffee and Cocoa Association projects production reaching 1.76 MMT in 2025-26—a four-year high representing 6% growth—contingent on favorable weather. These expanding Vietnamese supplies are pressuring robusta values, offsetting tightness elsewhere.

Brazil’s Rain Pattern Offers Modest Support

Somar Meteorologia reported that Minas Gerais, Brazil’s premier arabica region, received 38.3 mm of rainfall during the week ending December 19, matching 76% of historical average precipitation. While not exceptional, this moderate moisture supports crop development expectations.

Global Supply Picture: Record Production Ahead

The USDA Foreign Agriculture Service projected Thursday that 2025-26 global coffee production will reach a record 178.848 million bags—a 2.0% increase—driven by a 10.9% surge in robusta to 83.333 million bags, partially offset by a 4.7% contraction in arabica to 95.515 million bags. Ending global stocks are forecast to decline 5.4% to 20.148 million bags, suggesting measured tightness but not acute scarcity.

The International Coffee Organization’s November report corroborated this view, documenting that global coffee exports for the October-September marketing year barely declined 0.3% year-over-year to 138.658 million bags, underscoring normalized trade flows despite regional disruptions.

The Balancing Act Ahead

Coffee prices face crosscurrents: Indonesia’s flooding provides temporary arabica support, US coffee market dynamics remain fluid as tariff effects fade, and Vietnamese robusta expansion pressures broader market sentiment. Inventory normalization and record global production projections suggest range-bound trading rather than directional conviction, making this an environment where macro headlines and specific crop developments command outsized influence.