Global Coffee Supply Tightens Amid Weather Shocks and Tariff Pressures

Coffee futures climbed on Thursday as multiple supply-side pressures converged on the market. March arabica coffee futures rose +1.80 points (+0.48%) to close the session, while January ICE robusta surged +115 points (+2.55%), marking a 2-week peak. The dual rally reflected a combination of dollar weakness triggering short-covering in arabica and mounting weather concerns in Vietnam, the world’s dominant robusta producer.

Weather Disruptions Drive Regional Supply Worries

Vietnam’s coffee harvest is facing headwinds as heavy rainfall hammered the country’s primary growing zones. Dak Lak province, which anchors Vietnam’s coffee output, experienced delayed picking operations with additional downpours forecast through next week—a scenario that threatens yield quality and quantity. Meanwhile, Brazil’s coffee landscape presented a mixed picture: mid-week forecasts of substantial rainfall across key growing regions initially weighed on prices due to positive implications for crop development. However, a later weather report indicated that Minas Gerais, Brazil’s largest arabica production hub, received only 19.8 mm of rain during the week through November 14—just 42% of the historical norm—raising questions about moisture adequacy.

The divergent regional conditions underscore how climate variability continues shaping price action. Vietnam’s 2025/26 coffee output is projected to climb 6% year-over-year to 1.76 million metric tons, or approximately 29.4 million bags, hitting a 4-year high if conditions remain stable. Vietnam’s January-October 2025 coffee exports already climbed 13.4% year-over-year to 1.31 million metric tons, signaling robust supply momentum from the major robusta exporter.

U.S. Tariff Policy Reshapes Import Flows and Inventory

The tariff regime imposed by the Trump administration has fundamentally altered coffee import patterns, particularly for Brazilian supplies. While the administration dropped tariffs on certain non-U.S.-grown commodities including coffee at a 10% reciprocal rate, Brazilian coffee remains subject to a separate 40% tariff tied to alleged “national emergency” grounds. This dual-tariff structure has created considerable friction in U.S. coffee purchasing.

Brazilian coffee exports to America have cratered under this framework. U.S. purchases of Brazilian coffee from August through October dropped 52% year-over-year to just 983,970 bags compared to the same period last year. About one-third of America’s unroasted coffee historically derives from Brazil, making this tariff impact economically significant. The tariff burden has prompted American importers to void new Brazilian coffee contracts, tightening U.S. market supplies substantially.

One overlooked dimension in the tariff debate is whether any coffee is actually grown in the United States. The answer: minimal. The continental U.S. lacks the tropical climate and altitude conditions coffee requires; only Hawaii commercially produces coffee at scale, and volumes remain negligible relative to global demand. This reality underscores why tariff policies on Brazilian and Vietnamese supplies create outsized market impact—domestic production cannot offset import restrictions, leaving U.S. buyers entirely dependent on tariffed foreign sources.

ICE Inventory Compression Signals Supply Tightness

The tariff-driven import slowdown is manifesting sharply in registered coffee stocks. ICE-monitored arabica inventories fell to a 1.75-year low of 398,645 bags as of Thursday’s close, while ICE robusta holdings dropped to a 4-month low of 5,640 lots. This inventory compression—reflecting fewer Brazilian shipments entering U.S. ports—contrasts with historical norms and lends upside risk to prices if supply tightens further.

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year (October-September) slipped 0.3% year-over-year to 138.658 million bags. Despite incremental growth in some producing regions, total export volumes remain constrained relative to underlying demand.

Production Forecasts Point to Divergent Trajectories

Brazil’s output picture remains complicated. Conab, Brazil’s official crop forecasting agency, trimmed its 2025 arabica estimate by 4.9% in September to 35.2 million bags from a prior May forecast of 37.0 million bags. Total Brazil 2025 coffee production fell 0.9% to 55.2 million bags from the May estimate of 55.7 million bags. However, looking forward, StoneX projected last week that Brazil’s 2026/27 coffee output will reach 70.7 million bags, including 47.2 million bags of arabica—a +29% year-over-year increase assuming normal weather and reduced crop pressure.

The USDA’s Foreign Agriculture Service forecasted in June that 2025/26 global coffee production will rise 2.5% year-over-year to a record 178.68 million bags. Within that total, arabica production is expected to decline 1.7% to 97.022 million bags while robusta production climbs 7.9% to 81.658 million bags. Vietnam’s 2025/26 output is projected to reach 31 million bags, a 4-year high, while Brazil’s production is expected to edge up 0.5% to 65 million bags. Notably, 2025/26 ending global coffee stocks are forecast to rise 4.9% to 22.819 million bags from 21.752 million bags in 2024/25.

The Bottom Line

Coffee prices remain supported by a cocktail of supply pressures—Vietnam’s weather disruptions, Brazil’s tariff-induced export slowdown, and historically tight ICE inventories. While medium-term production forecasts suggest normalization, near-term market dynamics favor higher prices as buyers navigate tariff-constrained sourcing and weather-induced supply uncertainty.