Global Coffee Supply Tightens as Tariffs and Weather Reshape Market Dynamics

The Tariff Impact Reshapes Coffee Trade

Brazilian coffee exports face persistent headwinds with the Trump administration maintaining a substantial 40% tariff on imports from Brazil on national emergency grounds. While reciprocal tariffs on US-grown commodities were lifted, Brazilian coffee remains caught in the crossfire. This policy shift has already taken its toll: US purchases of Brazilian coffee from August through October plummeted 52% year-over-year to just 983,970 bags, as American buyers hesitate to lock in new contracts at punitive price levels.

The consequence is visible in warehouse data. ICE arabica inventories have collapsed to a 1.75-year low of 403,190 bags, while robusta stocks dipped to a 3.75-month minimum of 5,723 lots. These shrinking reserves are providing meaningful support to futures prices, with January robusta coffee up +252 points (+5.97%) today.

Weather Concerns Add Another Layer of Support

Brazil’s coffee production faces mounting pressure from unfavorable weather. Minas Gerais, the country’s largest arabica-growing region, received only 19.8 mm of rain during the week ending November 14—just 42% of the historical average. This drought stress comes as NOAA raised the probability of a La Niña event in the southern hemisphere to 71% for October-December, which could bring excessive dryness harmful to Brazil’s 2026/27 crop development.

Brazil’s crop forecasting agency Conab has already downgraded its 2025 arabica production by 4.9% to 35.2 million bags, reflecting current supply challenges. As the world’s largest arabica producer, any reduction from Brazil reverberates across global coffee captions in trading desks worldwide.

The Vietnamese Wildcard: Supply Abundance

While Brazilian supplies tighten, Vietnam is ramping up output. The Vietnam National Statistics Office reported coffee exports for January-October 2025 rose 13.4% year-over-year to 1.31 million metric tons. More significant for long-term pricing: Vietnam’s 2025/26 production is projected to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags), marking a 4-year high and reinforcing Vietnam’s position as the world’s largest robusta producer.

This supply abundance is weighing on robusta prices despite overall market tightness. The Vietnam Coffee and Cocoa Association noted that favorable weather conditions could push 2025/26 output 10% higher than the previous crop year.

What the Numbers Tell Us About Global Supply

The International Coffee Organization reported global coffee exports for the current marketing year (October-September) fell 0.3% year-over-year to 138.658 million bags—a sign that supply-demand dynamics are tightening despite Vietnam’s strong production.

Looking ahead, the USDA’s Foreign Agriculture Service projects world coffee production in 2025/26 will rise 2.5% year-over-year to a record 178.68 million bags. However, this masks divergent trends: arabica production is expected to decline 1.7% to 97.022 million bags, while robusta surges 7.9% to 81.658 million bags. Brazil’s output is forecast to increase modestly by 0.5% to 65 million bags, while Vietnam’s climb 6.9% to a 4-year high of 31 million bags.

StoneX’s initial 2026/27 forecast painted a more bullish picture for Brazil, projecting 70.7 million bags total production (+29% year-over-year), including 47.2 million bags of arabica—suggesting potential recovery if weather cooperates.

The Price Outlook

December arabica coffee is currently down 0.05%, reflecting conflicting signals between tariff-driven supply constraints and rising global production. The interplay between tariff policy, weather patterns, and competitive supply from Vietnam will likely determine whether coffee prices maintain current support levels or shift directionally.