At a Glance
- Both Arabica and Robusta coffee futures have surged to five-week peaks, driven by shrinking inventories.
- Concerns over Vietnam’s Robusta crop due to tropical storm activity are impacting global supply outlooks.
- Potential La Niña conditions pose a risk to Brazil’s upcoming coffee harvest, further supporting price increases.
- However, developments in U.S.-Brazil trade relations and easing dry weather in Brazil present potential headwinds for coffee prices.
Coffee Futures Reach Multi-Week Highs on Tightening Supplies
December Arabica coffee futures (KCZ25) closed up by +7.30 (+1.77%) on Wednesday, while November ICE Robusta coffee futures (RMX25) finished higher by +119 (+2.58%). This rally extended the week’s gains, pushing coffee prices to their highest levels in five weeks.
💡 The current strength in the coffee market is significantly attributed to dwindling ICE coffee inventories. This reduction is partly a consequence of tariffs imposed on U.S. imports from Brazil.
📊 On Wednesday, ICE-monitored Arabica inventories fell to a 19-month low of 465,910 bags. Simultaneously, ICE Robusta coffee inventories decreased to a three-month low of 6,141 lots. Reports indicate that U.S. buyers are suspending new contracts for Brazilian coffee beans due to the tariffs, leading to tighter supplies within the United States, where Brazil constitutes approximately one-third of unroasted coffee imports.
Global Weather Patterns and Trade Policies Influence Coffee Market Dynamics
Robusta coffee prices are also receiving support from concerns surrounding the coffee crop in Vietnam, the world’s largest producer of this variety. Vietnam’s weather office has warned that heavy rains from Tropical Storm Fengshen could result in flash floods and landslides, potentially jeopardizing coffee crops in the Central Highlands, Vietnam’s principal coffee-growing region.
⚡ Additional upward pressure on coffee prices stems from NOAA’s updated forecast, released on September 16. The National Oceanic and Atmospheric Administration has raised the probability of a La Niña weather system developing in the Southern Hemisphere between October and December to 71%. Such conditions could bring excessive dry weather to Brazil, potentially negatively impacting the 2026/27 coffee crop. Brazil is the leading global producer of Arabica coffee.
📍 Conversely, expectations that the 50% tariffs on Brazilian goods might be lifted in the near future are acting as a downward pressure on coffee prices. Last Thursday, U.S. Trade Representative Greer reported highly positive trade discussions with Brazilian Minister of Foreign Affairs Vieira. Both sides agreed to arrange a meeting between President Trump and President Lula at the earliest opportunity.
Analyzing Supply Dynamics and Production Forecasts
A potential easing of dry conditions in Brazil is also considered a bearish factor for coffee prices. On Monday, Somar Meteorologia reported that Minas Gerais, Brazil’s largest Arabica coffee-producing area, received 44.7 mm of rain in the week ending October 18, which is 136% of the historical average.
📊 Robusta coffee is also facing pressure from an increase in exportable supplies from Vietnam. Vietnam’s National Statistics Office reported on Monday that the country’s coffee exports from January to September 2025 increased by 10.9% year-over-year to 1.230 million metric tons. Furthermore, Vietnam’s 2025/26 coffee production is projected to rise by 6% year-over-year to 1.76 million metric tons, or 29.4 million bags, marking a four-year high. Vietnam is the world’s leading producer of Robusta coffee.
✅ The International Coffee Organization (ICO) reported on October 6 that global coffee exports for the current marketing year (October-August) rose by 0.2% year-over-year to 127.92 million bags. This indicates adequate export volumes and overall supplies, which typically exerts downward pressure on prices.
📌 Conab, Brazil’s crop forecasting agency, revised its estimate for Brazil’s 2025 Arabica coffee crop downward by 4.9% to 35.2 million bags on September 4, a decrease from its May forecast of 37.0 million bags. Conab also lowered its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, compared to the May estimate of 55.7 million bags. This downward revision provided some support to coffee prices.
📊 The USDA’s Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 would 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 7.9% increase in Robusta production to 81.658 million bags. 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 climb by 6.9% year-over-year to a four-year high of 31 million bags. The FAS forecasts ending stocks for 2025/26 to increase by 4.9% to 22.819 million bags from 21.752 million bags in 2024/25. However, Volcafe is projecting a global 2025/26 Arabica coffee deficit of 8.5 million bags, a widening from the -5.5 million bag deficit for 2024/25, marking the fifth consecutive year of deficits.
Expert Summary
The coffee market is currently experiencing upward momentum, primarily driven by tightening inventories and potential weather-related disruptions in key producing regions. While U.S. tariffs on Brazilian coffee and concerns regarding Vietnam’s crop are providing price support, future market sentiment may be influenced by diplomatic progress on trade and evolving weather patterns.