Coffee prices just took a hit on Tuesday with March arabica down 1.88% and robusta falling 2.37%. The main story here is Brazil - heavy rains in Minas Gerais last week (113% of historical average) are making traders less worried about dry conditions. That's actually bearish for prices because it means the Brazil coffee crop outlook is improving significantly.

The numbers are pretty interesting. Brazil's crop forecasting agency just said 2026 production will jump 17.2% year-over-year to 66.2 million bags, which would be a record. Arabica specifically is projected up 23.2% to 44.1 million bags. That kind of supply increase is weighing on the market.

It's not just Brazil though. Vietnam's been flooding the market with robusta exports - January shipments surged 38.3% year-over-year to 198,000 MT. Vietnam's looking at 1.76 MMT production for 2025/26, a 4-year high. Meanwhile, ICE inventories are recovering too, which adds more pressure. Arabica inventories bounced back to 461,829 bags in early January after hitting lows.

On the flip side, Colombia's having production issues - January output dropped 34% year-over-year. And Brazil's actually exporting less right now (down 42.4% in January), which is one of the few supportive signals. But overall, the Brazil coffee supply story is just too bullish for prices to hold up. The market's pricing in a much more abundant crop ahead.