Key Takeaways
- Arabica and Robusta coffee futures experienced a notable decline on Wednesday.
- Anticipated rainfall in Brazil is alleviating concerns about coffee crop development, pressuring prices downward.
- US tariffs on Brazilian coffee imports have contributed to shrinking ICE coffee inventories, offering some price support.
- Conflicting forecasts regarding Brazil’s upcoming coffee production and increased Vietnamese supplies present bearish signals for the market.
- Global coffee export data shows a slight year-over-year decrease, providing a bullish counterpoint to other market pressures.
Coffee Futures See Declines Amidst Brazilian Weather Forecasts
March arabica coffee futures (KCH26) closed down significantly on Wednesday, experiencing a loss of 12.85 points, or 3.31%. Similarly, January ICE robusta coffee futures (RMF26) saw a decline of 57 points, or 1.25%.
The sharp sell-off in coffee prices on Wednesday appears to be driven by improving weather prospects in Brazil. Forecasts for significant rainfall in the country’s key coffee-growing regions are considered supportive for coffee crop development, which is a bearish factor for market prices. Climatempo projected heavy showers toward the end of the week and into the following week.
Impact of US Tariffs on Coffee Markets
Prior to the recent downturn, coffee prices had seen an upward trend over the preceding two sessions, influenced by the impact of substantial US tariffs on Brazilian coffee. While the Trump administration announced a relaxation of tariffs on commodities not produced in the US, this relief was limited to 10% reciprocal tariffs. However, Brazil’s vice president indicated that exports to the US would still be subject to a separate 40% tariff implemented by the Trump administration on ostensibly national emergency grounds, partly linked to judicial actions concerning Brazil’s former President Bolsonaro. The clarity regarding whether US coffee importers are exempt from these higher tariffs remains pending.
Shrinking Coffee Inventories Offer Price Support
💡 Shrinking ICE coffee inventories are a key factor providing support to current coffee prices. The imposition of US tariffs on coffee imports from Brazil has led to a significant drawdown in ICE coffee stocks. Specifically, ICE-monitored arabica inventories dropped to a 1.75-year low of 396,513 bags on Tuesday. Concurrently, ICE robusta coffee inventories reached a four-month low of 5,648 lots on Monday.
📍American buyers have reportedly been voiding new contracts for Brazilian coffee due to the tariffs, consequently tightening US supplies. Brazil accounts for approximately one-third of America’s unroasted coffee imports. From August through October, the period during which President Trump’s tariffs took effect, US purchases of Brazilian coffee declined by 52% compared to the same period last year, totaling 983,970 bags.
Conflicting Production Forecasts and Weather Patterns
📌 Coffee prices also found support from recent meteorological data. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-producing region, received 19.8 mm of rain during the week ending November 14th, which represents 42% of the historical average.
📊 In contrast, StoneX issued a forecast last Wednesday projecting that Brazil will produce 70.7 million bags of coffee in the new 2026/27 marketing year. This estimate includes 47.2 million bags of arabica, marking a substantial 29% year-over-year increase.
Increased Vietnamese Supplies and Global Trade Dynamics
⚡ Increased coffee supplies from Vietnam are acting as a bearish pressure on prices. The Vietnam National Statistics Office reported on November 6th that Vietnam’s coffee exports from January to October 2025 rose by 13.4% year-over-year to 1.31 million metric tons. Furthermore, Vietnam’s 2025/26 coffee production is projected to increase by 6% year-over-year to 1.76 million metric tons (approximately 29.4 million bags), the highest level in four years. Adding to this, the Vietnam Coffee and Cocoa Association (Vicofa) stated on October 24th that Vietnam’s 2025/26 coffee output could be 10% higher than the previous crop year, assuming favorable weather conditions. Vietnam is the world’s leading producer of robusta coffee.
📊 Global coffee export figures offer a counterbalancing perspective. The International Coffee Organization (ICO) reported on November 7th that global coffee exports for the current marketing year (October-September) decreased by 0.3% year-over-year to 138.658 million bags, indicating a slight tightening of global supplies.
Brazilian Crop Estimates and USDA Projections
💡 Brazil’s crop forecasting agency, Conab, revised its estimate for the 2025 arabica coffee crop downwards on September 4th. The agency cut its estimate by 4.9% to 35.2 million bags, down from the May forecast of 37.0 million bags. Conab also reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, from a May estimate of 55.7 million bags.
📈 The USDA’s Foreign Agriculture Service (FAS) projected on June 25th that world coffee production in 2025/26 would increase by 2.5% year-over-year to a record 178.68 million bags. This increase is expected to be driven by a 7.9% rise in robusta production to 81.658 million bags, while arabica production is forecasted to decrease by 1.7% to 97.022 million bags. The FAS forecasts Brazil’s 2025/26 coffee production to rise by 0.5% year-over-year to 65 million bags, and Vietnam’s output to increase by 6.9% year-over-year to a four-year high of 31 million bags. The FAS projects 2025/26 ending stocks to climb by 4.9% to 22.819 million bags, up from 21.752 million bags in 2024/25.
Final Thoughts
The coffee market is currently navigating a complex interplay of factors. While anticipated rains in Brazil and increased Vietnamese supply exert downward pressure, shrinking inventory levels and ongoing tariff uncertainties provide underlying support. Market participants will continue to monitor weather patterns, trade policies, and production forecasts closely.
