Key Takeaways
- December arabica coffee futures (KCZ25) are down, while November ICE robusta coffee futures (RMX25) are up, indicating mixed market sentiment.
- Recent declines in coffee prices followed a period of gains, attributed to weather forecasts in Brazil and Vietnam.
- Concerns over dry conditions in Brazil and the impact of US tariffs on Brazilian coffee imports are providing underlying support for prices.
- Shrinking ICE coffee inventories for both arabica and robusta beans are also contributing to price support.
- Anticipation of potential removal of US tariffs on Brazilian goods could exert downward pressure on coffee prices.
Market Overview: Mixed Movements in Coffee Futures
December arabica coffee futures (KCZ25) experienced a decline today, trading down -7.25 (-1.77%). In contrast, November ICE robusta coffee futures (RMX25) showed an increase, rising +37 (+0.81%).
This mixed performance follows a significant downturn on Thursday, which saw NY arabica coffee fall by -2.54% and robusta coffee drop by -3.90%. Both coffee types had recently retreated from their strong positions; arabica coffee had reached an 8.3-month nearest-futures high, while robusta coffee achieved a 5-week high prior to Thursday’s sell-off.
Weather and Supply Dynamics Influencing Prices
Arabica coffee prices were negatively impacted on Thursday by a forecast from Climatempo predicting weekend showers for Brazil’s coffee-growing regions. Concurrently, robusta coffee saw a slump after Vietnam’s weather office reduced the likelihood of heavy rains from Tropical Storm Fengshen in the Central Highlands, Vietnam’s primary coffee-producing area. This reduction in expected rainfall lessened the perceived risk of crop damage.
Despite a bearish forecast from the Vietnam Coffee and Cocoa Association (Vicofa) indicating a potential 10% increase in Vietnam’s coffee output for the 2025/26 crop year (weather permitting), robusta coffee prices are currently trading higher.
Underlying Support Factors for Coffee Prices
persistent concerns regarding excessive dry conditions in key Brazilian coffee-producing regions during the critical flowering period for coffee trees continue to underpin coffee prices. These conditions pose a potential threat to the 2026/27 coffee crop.
💡 According to Bloomberg Brazil Weather Analysis, major coffee-producing areas in Brazil have been enduring an intense drought, with Minas Gerais, a significant coffee state, receiving only about 70% of its average rainfall for this period over the last month.
⚡ Shrinking inventories held by ICE are also providing substantial support to coffee prices. The imposition of 50% tariffs on US imports from Brazil has led to a sharp reduction in ICE coffee inventories.
- ICE-monitored arabica inventories dropped to a 19-month low of 465,910 bags on Wednesday.
- ICE robusta coffee inventories decreased to a 3-month low of 6,141 lots.
📌 American buyers are reportedly avoiding new contracts for Brazilian coffee purchases due to the substantial 50% tariffs on US imports from Brazil. This has created tighter supplies within the US, as Brazil accounts for approximately one-third of America’s unroasted coffee imports.
Geopolitical and Climate Factors Affecting Coffee Markets
📈 The National Oceanic and Atmospheric Administration (NOAA) has increased the probability of a La Niña weather system developing in the southern hemisphere between October and December to 71%. Historically, La Niña events can bring excessively dry weather to Brazil, potentially harming the 2026/27 coffee crop. Brazil is recognized as the world’s largest producer of arabica coffee.
⚡ An expectation that the imposed 50% tariffs on Brazilian goods might be removed soon is a factor that could exert downward pressure on coffee prices. Recent discussions between US and Brazilian officials, including remarks from US Trade Representative Greer and Brazilian Minister of Foreign Affairs Vieira, about very positive talks and scheduling a meeting between Presidents Trump and Lula, suggest potential diplomatic progress on trade issues.
📍 Conversely, recent rainfall figures from Somar Meteorologia indicate that Minas Gerais, one of Brazil’s largest arabica coffee-growing areas, received 44.7 mm of rain during the week ending October 18. This amount represents 136% of the historical average for the region, suggesting a temporary improvement in local moisture conditions.
Vietnam’s Output and Global Supply Trends
📊 Robusta coffee is also facing pressure from increased supply originating from Vietnam. The Vietnam National Statistics Office reported that Vietnam’s coffee exports for January-September 2025 rose 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 increase by 6% year-over-year to 1.76 MMT, which equates to 29.4 million bags – a four-year high. Vietnam is the world’s foremost producer of robusta coffee.
✅ The International Coffee Organization (ICO) reported on October 6 that global coffee exports for the current marketing year (October-August) saw a modest increase of 0.2% year-over-year, reaching 127.92 million bags. This suggests adequate export volumes and overall supply in the global market.
Official Projections and Market Deficits
📊 Conab, Brazil’s national crop forecasting agency, revised its estimate for Brazil’s 2025 arabica coffee crop downwards by 4.9% to 35.2 million bags in early September, a decrease from its May forecast of 37.0 million bags. Conab also marginally reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags.
The USDA’s Foreign Agriculture Service (FAS) projected in late June that world coffee production for 2025/26 would increase by 2.5% year-over-year to a record 178.68 million bags. This projection includes a slight decrease in arabica production to 97.022 million bags and a significant 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.
- Vietnam’s 2025/26 coffee output is expected to grow by 6.9% year-over-year to a four-year high of 31 million bags.
- Ending stocks for 2025/26 are forecasted by FAS to climb by 4.9% to 22.819 million bags, up from 21.752 million bags in 2024/25.
📌 In contrast, Volcafe is projecting a global deficit in arabica coffee for 2025/26 amounting to -8.5 million bags. This is a wider deficit than the -5.5 million bag deficit anticipated for 2024/25 and indicates the fifth consecutive year of deficits for arabica coffee.
Final Thoughts
The coffee market is currently navigating a complex interplay of weather patterns, supply chain disruptions due to tariffs, and production forecasts from major global producers. Mixed signals from weather reports and differing projections on global supply and demand are contributing to price volatility.
Traders and analysts will be closely monitoring developments in Brazil and Vietnam, as well as any shifts in trade policy between the US and Brazil, to gauge future price directions for both arabica and robusta coffee.
