Supply Prospects Push Prices Lower

In Vietnam (the world's second-largest producer), the 25/26 harvest began to pick up pace in December after delays in recent months. Constant and heavy rains since October, caused by several typhoons and storms, prevented producers from harvesting coffee and delayed the drying of beans, in addition to causing logistical problems. However, with the reduction in rainfall this month and the normalization of work, more coffee has been reaching the market, with reports of more aggressive sales by Vietnamese traders in recent days.

In addition, even with the delay in field work in recent months, Vietnam's coffee exports are beginning to show signs of recovery. In the first two months of the 25/26 season (Oct. and Nov.), the Asian country has already exported 2.6 million bags, an increase of 42.2% over the same period in 24/25 crop. With higher production expected this year and the harvest finally gaining momentum, shipments from the country are expected to remain at higher levels, increasing supply in the coming months.

It is worth remembering that other origins, such as Uganda, Ethiopia, Colombia, and Central American countries, are also in their 25/26 harvest period, which tends to contribute to global coffee exports and trade flows in the coming months.

However, the development of Brazil's 26/27 crop, as well as the country's exports, remains one of the market's main points of attention. So far, rainfall has been beneficial for the filling of Arabica and Conilon beans in the country, with expectations of a recovery in the former variety in the next cycle, which could lead to production of between 71 and 74.4 million bags (see our complete figures) and help in the recovery of global stocks.

On the other hand, exports for the 25/26 cycle remained slower. Data from Cecafé point to a drop in shipments in November, with only 3.5 million bags of coffee in total, down 13.6% from October and 26.7% from the same period in 2024. Of this amount, Arabica coffee exports totaled 3.03 million bags, 18.3% lower than last year, while Conilon shipments reached 259,300 bags, down 67.9% in the same comparison.

The Council noted that weaker performance was driven by two main factors: U.S. tariffs on Brazilian beans and delays in port infrastructure, which created shipping bottlenecks. Cecafé estimates that in October, more than 2,000 containers, equivalent to 681,590 bags of coffee, failed to leave port.

On the other hand, with tariffs lifted, exports are expected to increase from December. Still, duties on soluble coffee – which makes up around 10% of shipments to the U.S – along with ongoing logistical bottlenecks, could continue to pose challenges.

It’s worth noting that weaker export figures may also reflect slower domestic sales in Brazil. Safras & Mercado reports that by November, coffee sales had reached 69% of the 25/26 harvest – below last year’s level of 79% and the five‑year average of 74%. This slowdown was seen in both Arabica and Conilon varieties. Overall, trading activity is expected to remain subdued through year‑end, particularly after recent price declines. Typically, producers increase sales volumes as the harvest nears to cover production costs.

Even so, although the presence of Brazilian producers in the market may remain low at the end of 2025 and beginning of 2026, pressure from a larger harvest in 26/27 assuming favorable Weather – may maintain the current downward trend in prices. Expectations of more comfortable supply in 2026 may also prompt speculative funds to liquidate part of their long positions, adding further pressure.

Beyond origins, regulatory developments in Europe are also weighing on sentiment. Last week, the European Parliament approved another postponement of the EU Anti Deforestation Regulation (EUDR). The text still requires approval by the Council and publication in the Official Journal of the EU before year end 2025. This delay strengthens bearish arguments, as European buyers now have additional time to secure coffee purchases.

laleska.moda@hedgepointglobal.com