Key Takeaways
- Arabica and robusta coffee futures experienced significant declines on Wednesday, reaching multi-week lows.
- Potential tariff reductions on coffee imports, announced by US officials, contributed to the price drop.
- Analysts project robust increases in coffee production from Brazil and Vietnam for the upcoming season.
- Favorable weather conditions and expanding Vietnamese output are creating bearish sentiment in the market.
- However, shrinking global inventories and concerns over La Niña’s impact on Brazilian crops offer some price support.
Coffee Market Sees Sharp Sell-off
December arabica coffee futures (KCZ25) closed down -19.05 (-4.51%) on Wednesday, while January ICE robusta coffee futures (RMF26) saw a steeper decline, closing down -252 (-5.46%). Both coffee contracts experienced significant sell-offs, with robusta futures hitting a two-week low.
The sharp decrease in coffee prices was influenced by comments from President Trump on Tuesday, suggesting potential reductions in coffee import tariffs. Losses accelerated on Wednesday following Treasury Secretary Bessent’s remarks about substantial upcoming announcements regarding crops not grown in the U.S., including coffee.
Production Outlooks Signal Increased Supply
Adding to the downward pressure, StoneX released its initial forecast for the 2026/27 season, projecting Brazil to produce 70.7 million bags of coffee. This figure includes an estimated 47.2 million bags of arabica, representing a significant year-over-year increase of 29%.
💡 Ample rainfall in Brazil’s key arabica-growing regions has eased concerns about dryness. Recent reports indicate that Minas Gerais, Brazil’s largest arabica coffee-producing area, received 72.1 mm of rain in the week ending November 7, which is 160% of the historical average. While beneficial for crop health, such conditions can be bearish for coffee prices.
Further contributing to the bearish sentiment are increasing coffee supplies from Vietnam. Official data shows that Vietnam’s coffee exports from January to October 2025 rose by 13.4% year-over-year to 1.31 million metric tons. For the 2025/26 season, Vietnam’s coffee production is projected to climb by 6% year-over-year to 1.76 million metric tons (approximately 29.4 million bags), marking a four-year high.
⚡ The Vietnam Coffee and Cocoa Association (Vicofa) indicated on October 24 that Vietnamese coffee output for 2025/26 could increase by 10% compared to the previous crop year, provided weather conditions remain favorable. Vietnam is the world’s leading producer of robusta coffee.
Factors Supporting Coffee Prices
Despite the prevailing bearish factors, signs of tighter global coffee supplies are providing some support to prices. The International Coffee Organization (ICO) reported on Monday that global coffee exports for the current marketing year (October-September) have seen a slight decrease of 0.3% year-over-year, totaling 138.658 million bags.
📍 Shrinking ICE coffee inventories are also a supportive element for prices. The imposition of 50% tariffs on U.S. imports from Brazil has led to a notable drawdown in ICE coffee inventories. ICE-monitored arabica inventories fell to a 1.75-year low of 404,930 bags this past Wednesday. In parallel, ICE robusta coffee inventories declined to a 3.75-month low of 5,873 lots on Monday.
American buyers are reportedly avoiding new contracts for Brazilian coffee due to the significant tariffs, tightening U.S. supplies as approximately one-third of the nation’s unroasted coffee originates from Brazil.
📊 Coffee prices found some support following an announcement by the National Oceanic and Atmospheric Administration (NOAA) on September 16. NOAA increased the likelihood of a La Niña weather system developing in the southern hemisphere between October and December to 71%. Such conditions could bring exceptionally dry weather to Brazil, potentially impacting the 2026/27 coffee crop. Brazil is the world’s largest producer of arabica coffee.
Further price support came from Conab, Brazil’s crop forecasting agency. On September 4, Conab revised its Brazil 2025 arabica coffee crop estimate downward by 4.9% to 35.2 million bags, from a previous forecast of 37.0 million bags made in May. Conab also slightly reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, down from the May estimate of 55.7 million bags.
Global Production Forecasts
The USDA’s Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 is expected to increase by 2.5% year-over-year to a record 178.68 million bags. This includes a projected 1.7% decrease in arabica production to 97.022 million bags and a significant 7.9% increase in robusta production to 81.658 million bags.
FAS forecasts that Brazil’s 2025/26 coffee production will rise by 0.5% year-over-year to 65 million bags. Concurrently, Vietnam’s 2025/26 coffee output is anticipated to increase by 6.9% year-over-year, reaching a four-year high of 31 million bags. The FAS also predicts that 2025/26 ending stocks will climb by 4.9% to 22.819 million bags, an increase from 21.752 million bags in 2024/25.
Expert Summary
The coffee market experienced a notable downturn influenced primarily by potential tariff relaxations and robust production forecasts from major growing regions like Brazil and Vietnam. While improved weather in Brazil and increased Vietnamese output contribute to bearish sentiment, tightening global inventories and the potential impact of La Niña offer underlying support to coffee prices.
