Coffee Supply Crisis Sends Prices Soaring Amid Global Woes

Arabica and robusta coffee futures both surged on Thursday, reflecting mounting supply anxieties that are reshaping the commodity landscape. March arabica coffee climbed +1.80 (+0.48%), while January ICE robusta coffee jumped +115 (+2.55%) to reach a 2-week high. The sharp move underscores how supply-side headwinds are overwhelming bearish factors in the market.

Weather Woes in Vietnam Reignite Robusta Rally

Vietnam’s coffee woes intensified after heavy rainfall disrupted harvesting in Dak Lak Province, the nation’s largest coffee-growing region. The deluge has delayed crucial harvesting operations, with additional showers forecast that threaten further crop damage. As the world’s dominant robusta producer, any disruption in Vietnam carries outsized market implications. On the positive side for Vietnam, the country’s coffee exports surged +13.4% year-over-year to 1.31 million metric tons (Jan-Oct 2025), and production is projected to climb +6% to 1.76 MMT in 2025/26—a 4-year high.

Despite production gains, Vietnam’s coffee woes stem from quality concerns and logistical challenges tied to weather volatility. The Vietnam Coffee and Cocoa Association indicated output could be 10% higher in 2025/26 if weather cooperates, signaling that current conditions remain precarious.

US Tariff Drama Tightens Arabica Supplies

Brazil’s coffee woes are primarily policy-driven. The Trump administration’s 40% tariff on Brazilian commodities has decimated US import demand. US purchases of Brazilian coffee dropped a staggering 52% (August-October 2025) to just 983,970 bags compared to the same period last year. This collapse in demand is creating severe inventory pressures.

ICE-monitored arabica inventories plummeted to a 1.75-year low of 398,645 bags, while robusta stocks fell to a 4-month low of 5,640 lots. American importers are abandoning new Brazilian coffee contracts due to tariff exposure, effectively removing about one-third of US unroasted coffee supply from circulation.

The tariff uncertainty persists: while Trump dropped reciprocal tariffs on non-US commodities, the 40% “national emergency” tariff on Brazilian coffee remains ambiguous for US importers, creating additional supply confusion.

Production Forecasts Paint Mixed Picture

Brazil’s Conab agency cut its 2025 arabica crop estimate by -4.9% to 35.2 million bags (down from 37.0 million bags), and trimmed total coffee production by 0.9% to 55.2 million bags. Yet looking ahead, StoneX forecasted that Brazil will produce 70.7 million bags in 2026/27 (+29% y/y), including 47.2 million bags of arabica—a significant rebound that could ease some supply woes.

The USDA’s Foreign Agriculture Service painted a more optimistic global picture, projecting world coffee production in 2025/26 at a record 178.68 million bags (+2.5% y/y). However, arabica output is expected to decline -1.7% to 97.022 million bags, while robusta climbs +7.9% to 81.658 million bags. Brazil’s 2025/26 output is forecast at 65 million bags (+0.5% y/y), and Vietnam’s at 31 million bags (+6.9% y/y).

Why Supply Woes Matter Now

Global coffee exports for the current marketing year fell -0.3% year-over-year to 138.658 million bags, according to the International Coffee Organization. Shrinking inventories combined with tariff-induced demand destruction have created an unusual supply-demand imbalance that favors prices.

Brazil’s Minas Gerais region received only 19.8 mm of rain (42% of historical average) during the week ended November 14, a drier-than-normal condition that, while supportive of near-term prices, hints at potential crop stress. Meanwhile, Brazilian weather forecasts predict heavy showers toward late this week and into next week—conditions that could pressure prices if they materialize.

Dollar weakness on Thursday also prompted short-covering in arabica, adding fuel to the rally. FAS projects ending stocks will climb +4.9% to 22.819 million bags in 2025/26, offering some medium-term relief, but near-term supply woes remain acute and are likely to keep prices supported.