Key Takeaways
- December arabica coffee futures (KCZ25) closed down 2.54%, and November ICE robusta coffee futures (RMX25) fell 3.90% on Thursday.
- Both coffee varieties experienced a sharp sell-off after an early rally, retreating from recent highs due to updated weather forecasts for Brazil and Vietnam.
- Concerns over drought conditions in Brazil and tightening US coffee inventories due to import tariffs provided initial support for prices.
- Conversely, improved weather outlooks in key producing regions and increased export forecasts from Vietnam are exerting downward pressure on coffee prices.
December arabica coffee futures (KCZ25) settled down 10.70 (-2.54%) on Thursday. Concurrently, November ICE robusta coffee futures (RMX25) closed lower by 185 (-3.90%).
Coffee prices reversed an early rally on Thursday, experiencing a significant sell-off. Arabica coffee declined from an 8.5-month nearest-futures high, while robusta coffee fell from a 5-week peak. The retreat in arabica was attributed to a forecast of weekend showers for Brazil’s coffee-growing regions, according to Climatempo. Robusta coffee slumped following a revised outlook from Vietnam’s weather office, which indicated a lower probability of heavy rains from Tropical Storm Fengshen in the Central Highlands, thus reducing the perceived risk of crop damage in Vietnam’s primary coffee-producing area.
Market Dynamics and Influences
Coffee futures initially surged on Thursday, driven by worries that prolonged dry weather in Brazil during the critical coffee tree flowering period could jeopardize the 2026/27 coffee crop. Analysis from Bloomberg Brazil Weather indicated that coffee-producing regions in Brazil have been enduring severe drought conditions, with Minas Gerais recording approximately 70% of its average rainfall over the past month for this period.
💡 Shrinking ICE coffee inventories are also providing a floor for coffee prices. The imposition of 50% tariffs on imports from Brazil has led to a substantial reduction in ICE coffee stocks. ICE-monitored arabica inventories dropped to a 19-month low of 465,910 bags on Wednesday. Similarly, ICE robusta coffee inventories decreased to a 3-month low of 6,141 lots.
📍 American buyers are reportedly avoiding new contracts for Brazilian coffee due to the significant 50% import tariffs, which is constricting US supplies. Brazil is a crucial supplier, accounting for roughly one-third of America’s unroasted coffee imports.
Climatic and Trade Factors
Coffee prices also found support following an announcement by the National Oceanic and Atmospheric Administration (NOAA) on September 16. NOAA increased the probability of a La Niña weather system in the southern hemisphere occurring between October and December to 71%. Such a phenomenon could bring excessively dry weather to Brazil, potentially harming the 2026/27 coffee crop. Brazil holds the position of the world’s largest producer of arabica coffee.
✅ Hopes for an imminent removal of the 50% tariffs on Brazilian goods are currently acting as a negative factor for coffee prices. Last Thursday, US Trade Representative Greer reported very positive talks with Brazilian Minister of Foreign Affairs Vieira concerning trade issues. Both parties indicated an intention to schedule a meeting between President Trump and President Lula at the earliest opportunity.
📊 Somar Meteorologia reported on Monday that Minas Gerais, Brazil’s most significant arabica coffee-growing region, received 44.7 mm of rain in the week ending October 18. This amount represents 136% of the historical average for the region.
Global Supply and Demand
Robusta coffee is experiencing downward pressure due to amplified supplies originating from Vietnam. The Vietnam National Statistics Office reported last Monday that Vietnam’s coffee exports from January to September 2025 increased by 10.9% year-over-year, reaching 1.230 million metric tons (MMT). Furthermore, Vietnam’s coffee production for the 2025/26 season is projected to rise by 6% year-over-year to 1.76 MMT, equivalent to 29.4 million bags, marking a four-year high. Vietnam is recognized as the world’s largest producer of robusta coffee.
⚡ Increased coffee exports generally have a bearish impact on prices. 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, suggesting adequate export volumes and supplies in the global market.
📌 Coffee prices received some support after Conab, Brazil’s official 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, from a 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, compared to the 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 projection includes a 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 see a modest increase of 0.5% year-over-year to 65 million bags, and Vietnam’s output is expected to rise by 6.9% year-over-year to a four-year high of 31 million bags. The FAS forecast also suggests that 2025/26 ending stocks will climb by 4.9% to 22.819 million bags from 21.752 million bags in 2024/25. However, Volcafe is projecting a global deficit of 8.5 million bags for arabica coffee in 2025/26, a wider deficit than the 5.5 million bags projected for 2024/25, indicating the fifth consecutive year of deficits for arabica.
Expert Summary
Coffee markets experienced a notable downturn on Thursday, with both arabica and robusta futures closing significantly lower. Weather forecasts for key producing regions in Brazil and Vietnam, along with evolving trade policies and global supply dynamics, are creating volatility and influencing price movements.