Key Takeaways
- Coffee prices, especially robusta, are rising due to dollar weakness and weather concerns in Vietnam.
- Heavy rains in Vietnam’s Dak Lak province are delaying harvests and threatening crops.
- Declining ICE-monitored arabica and robusta coffee inventories are contributing to higher prices.
- Brazilian coffee tariffs continue to impact US imports, tightening supplies.
- Despite some bearish forecasts about future production, current supply concerns are driving the market.
Coffee prices are trending upwards, with robusta reaching a two-week high. A weaker dollar has encouraged short covering in arabica coffee, while concerns over weather patterns in Vietnam are bolstering robusta prices. Significant rainfall has disrupted harvesting activities in Dak Lak, Vietnam’s primary coffee-growing region, with further rain projected, potentially damaging crops.
Market Dynamics and Influencing Factors
On Wednesday, coffee prices experienced a sharp decline following forecasts of rain in Brazil. These precipitation events are generally supportive of coffee crop development, which can lead to bearish price movements. Climatempo had predicted substantial showers for Brazil’s coffee-growing regions by the end of the week and into the next.
Earlier in the week, coffee prices had increased, largely due to tariffs imposed on Brazilian coffee by the US. The Trump administration announced last Friday the removal of tariffs on certain commodities not grown in the US, including coffee. However, this relief only applied to reciprocal 10% tariffs. Brazil’s vice president stated that Brazilian coffee exports to the US are still subject to a separate 40% tariff, implemented by the Trump administration under national emergency grounds, partly linked to Brazil’s prosecution of former President Bolsonaro. There is still no clarification from the Trump administration regarding whether US coffee importers are exempt from these 40% tariffs.
Inventory Levels and Trade Relations
Shrinking ICE coffee inventories are also providing support to prices. The US tariffs on coffee imports from Brazil have led to a significant reduction in ICE coffee stockpiles. ICE-monitored arabica inventories dropped to a 1.75-year low of 396,513 bags on Tuesday. Similarly, ICE robusta coffee inventories fell to a four-month low of 5,640 lots today. American buyers are opting out of new contracts for Brazilian coffee purchases because of these tariffs, which in turn tightens US supplies, given that about one-third of America’s unroasted coffee originates from Brazil.
US purchases of Brazilian coffee from August through October, coinciding with the implementation of President Trump’s tariffs, decreased by 52% compared to the same period last year, totaling 983,970 bags. Coffee prices also received support from news on Monday from Somar Meteorologia, indicating that Minas Gerais, Brazil’s largest arabica coffee-growing area, received only 19.8 mm of rain during the week ending November 14, which is merely 42% of the historical average.
Production Forecasts and Global Exports
📍 In a bearish development, StoneX projected last Wednesday that Brazil would produce 70.7 million bags of coffee in the new 2026/27 marketing year, including 47.2 million bags of arabica, representing a significant 29% year-over-year increase.
Increased coffee supplies from Vietnam are exerting downward pressure on prices. On November 6, the Vietnam National Statistics Office reported that Vietnam’s coffee exports for January-October 2025 surged by 13.4% year-over-year to 1.31 million metric tons (MMT). Furthermore, Vietnam’s 2025/26 coffee production is anticipated to rise by 6% year-over-year, reaching 1.76 MMT, or 29.4 million bags, marking a four-year high. Additionally, the Vietnam Coffee and Cocoa Association (Vicofa) stated on October 24 that Vietnam’s coffee output in 2025/26 could be 10% higher than the previous crop year, provided favorable weather conditions persist. Vietnam is recognized as the world’s largest producer of robusta coffee.
Supply Indicators and Agency Reports
Signs of tighter global coffee supplies are bolstering prices, as indicated by the International Coffee Organization (ICO) report on November 7. The report showed that global coffee exports for the current marketing year (October-September) decreased by 0.3% year-over-year to 138.658 million bags.
Coffee prices found support after Conab, Brazil’s crop forecasting agency, lowered its Brazil 2025 arabica coffee crop estimate on September 4 by 4.9% to 35.2 million bags, down from a May forecast of 37.0 million bags. Conab also revised its total Brazil 2025 coffee production estimate downwards 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 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 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 forecasted that Brazil’s 2025/26 coffee production would increase by 0.5% year-over-year to 65 million bags, and Vietnam’s 2025/26 coffee output would rise by 6.9% year-over-year to a four-year high of 31 million bags. FAS also projected that 2025/26 ending stocks would climb by 4.9% to 22.819 million bags from 21.752 million bags in 2024/25.
Final Thoughts
The current coffee market is experiencing upward price pressure, primarily driven by dollar weakness, adverse weather in Vietnam, and diminishing ICE coffee inventories. While some forecasts predict increased future production, present challenges like tariffs on Brazilian coffee and global supply reductions continue to influence market dynamics. These factors collectively create a complex environment for coffee prices, with short-term gains being balanced against longer-term supply outlooks.
