Key Takeaways
- March arabica coffee futures closed higher, while January ICE robusta coffee futures saw a significant jump to a two-week high.
- Dollar weakness influenced arabica prices, and weather concerns in Vietnam boosted robusta coffee.
- Recent rain forecasts in Brazil had previously pressured coffee prices.
- US tariffs on Brazilian coffee imports continue to impact supply and pricing dynamics.
- Shrinking global coffee inventories are providing underlying support for coffee prices.
Market Movements and Influencing Factors
March arabica coffee futures (KCH26) experienced an upturn, closing up 1.80 points (0.48%) on Thursday. Concurrently, January ICE robusta coffee futures (RMF26) saw a substantial gain, closing up 115 points (2.55%), reaching a two-week high.
The upward movement in coffee prices on Thursday was driven by several factors. A weaker U.S. dollar prompted some short-covering activity in the arabica market. Simultaneously, concerns over weather conditions in Vietnam provided a bullish boost to robusta coffee prices. Reports indicated that heavy rain had hampered harvesting operations in Vietnam’s primary coffee-growing province, Dak Lak, with further rainfall anticipated to potentially damage crops.
Recent Price Pressures and Tariff Impacts
Earlier in the week, coffee prices faced downward pressure due to forecasts of rain in Brazil, which are typically conducive to coffee crop development. Specifically, weather service Climatempo predicted significant rainfall in Brazil’s key coffee-producing regions towards the end of the week and into the following week.
However, prior to this, coffee prices had found some support earlier in the week amidst ongoing discussions surrounding substantial U.S. tariffs on Brazilian coffee. While an announcement from the Trump administration indicated a removal of tariffs on commodities not grown in the U.S., this relief pertained only to reciprocal 10% tariffs. Reports from Brazil’s vice president highlighted that Brazilian coffee exports to the U.S. could still be subject to a separate 40% tariff, imposed on national emergency grounds, which was partially linked to legal proceedings involving former President Bolsonaro. Clarification remains pending from the Trump administration regarding whether U.S. coffee importers are exempt from these 40% tariffs.
Inventory Levels and Supply Chain Adjustments
Shrinking ICE coffee inventories are also contributing to price support. The imposition of U.S. tariffs on coffee imports from Brazil has notably led to a significant drawdown in ICE coffee stocks. On Thursday, ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags. Similarly, ICE robusta coffee inventories declined to a four-month low of 5,640 lots.
American buyers have reportedly been hesitant to enter into new purchase contracts for Brazilian coffee due to the tariffs, which is tightening U.S. supplies. Brazil accounts for approximately one-third of America’s unroasted coffee imports. Data indicates that during August through October, the period subsequent to the implementation of President Trump’s tariffs, U.S. purchases of Brazilian coffee decreased by 52% compared to the same period last year, totaling 983,970 bags.
Further support for coffee prices arose from news on Monday, as reported by Somar Meteorologia, indicating that Minas Gerais, Brazil’s largest arabica coffee-producing region, received only 19.8 mm of rain in the week ending November 14th, which is 42% of the historical average for that period.
Production Forecasts and Global Supply Dynamics
In a bearish development, StoneX forecasted on Wednesday that Brazil is projected to produce 70.7 million bags of coffee in the 2026/27 marketing year. This total includes an estimated 47.2 million bags of arabica, marking a significant year-over-year increase of 29%.
Conversely, increased Vietnamese coffee supplies are acting as a bearish factor for 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. Projections for Vietnam’s 2025/26 coffee production indicate a rise of 6% year-over-year to 1.76 million metric tons, equivalent to 29.4 million bags, which would be a four-year high. Furthermore, 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 recognized as the world’s largest producer of robusta coffee.
Signs pointing to tighter global coffee supplies are offering support to prices. The International Coffee Organization (ICO) reported on November 7th that global coffee exports for the current marketing year (October-September) declined by 0.3% year-over-year to 138.658 million bags.
Coffee prices also found support after Conab, Brazil’s crop forecasting agency, revised its 2025 arabica coffee crop estimate downward by 4.9% to 35.2 million bags on September 4th, from a previous 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, down from 55.7 million bags in May.
The U.S. Department of Agriculture’s Foreign Agriculture Service (FAS) projected on June 25th 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 anticipated rise includes a 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 that Brazil’s 2025/26 coffee production will rise by 0.5% year-over-year to 65 million bags, and Vietnam’s 2025/26 output is projected to climb by 6.9% year-over-year to a four-year high of 31 million bags. For the 2025/26 period, FAS forecasts ending stocks to increase by 4.9% to 22.819 million bags, up from 21.752 million bags in 2024/25.
Concluding Market Insights
The coffee market exhibits a complex interplay of factors influencing arabica and robusta prices. While weather patterns in key producing regions like Vietnam and Brazil, alongside global inventory levels, continue to drive short-term fluctuations, geopolitical trade policies such as U.S. tariffs on Brazilian coffee introduce significant structural influences on supply and market accessibility. Traders are closely monitoring these elements to gauge future price trajectories.
