Vietnamese Coffee Market Strengthens Amid Weather Disruptions and Supply Constraints

Coffee futures markets are experiencing notable upward momentum today, with robusta contracts reaching 2-week highs while arabica prices gain ground on currency movements and structural supply concerns. The divergence in performance between these two coffee varieties reflects distinct regional pressures reshaping the global commodity landscape.

Weather Threats Drive Vietnamese Coffee Higher

Vietnam’s coffee production faces mounting pressure from unfavorable weather patterns. Dak Lak province, accounting for the bulk of Vietnam’s coffee harvest, is experiencing heavy rainfall that has interrupted picking operations. Forecasters warn of additional showers ahead, raising concerns about potential crop damage. As the world’s largest robusta coffee producer, disruptions to Vietnamese coffee supply inject immediate bullish sentiment into robusta contracts, which surged +2.37% today.

The weather-driven anxiety stands in contrast to Brazil’s situation, where recent rainfall forecasts initially prompted selling. However, the market’s response has proven nuanced—while rain supports Brazilian coffee crop development, it also triggered profit-taking on Wednesday. Long-term, Brazil’s production outlook remains more constructive than supply constraints elsewhere.

Tariff Dynamics Reshape Coffee Trade Flows

US tariffs continue to exert outsized influence on arabica coffee dynamics. Although the Trump administration removed reciprocal tariffs on non-domestically grown commodities including coffee, Brazilian coffee still faces a 40% tariff on “national emergency” grounds. This tariff structure has fundamentally altered import behavior.

US purchases of Brazilian coffee from August through October dropped 52% year-over-year to 983,970 bags as importers suspended new contracts. With Brazil supplying approximately one-third of America’s unroasted coffee, this contraction tightens domestic supplies. The tariff environment continues to support arabica prices despite ongoing uncertainty about exemption eligibility for importers.

Inventory Compression Reinforces Price Support

Physical supply tightness amplifies the upside pressure on both coffee varieties. ICE-monitored arabica inventories hit a 1.75-year low of 396,513 bags on Tuesday, reflecting the disruptive impact of tariffs on import flows. Robusta inventories fell to a 4-month low of 5,640 lots, signaling depleted reserves amid Vietnamese coffee supply concerns.

The sharply compressed inventory picture creates a floor beneath prices, as buyers face genuine scarcity rather than mere price weakness.

Vietnamese Coffee Output Projected Higher Despite Setbacks

While near-term weather disruptions present risks, longer-term vietnamese coffee production forecasts point toward expansion. Vietnam’s coffee exports from January through October 2025 climbed 13.4% year-over-year to 1.31 million metric tons. The 2025/26 crop is projected to reach 1.76 million metric tons or 29.4 million bags—a 4-year high and representing 6% growth year-over-year.

The Vietnam Coffee and Cocoa Association noted that output could exceed forecasts by 10% if weather stabilizes, adding uncertainty to supply projections. This production growth carries downward implications for prices over the medium term, even as near-term weather concerns support values.

Global Market Dynamics Present Mixed Signals

The International Coffee Organization reported that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags, suggesting tightness remains embedded in supply chains despite growing vietnamese coffee and Brazilian production.

Brazil’s arabica crop estimates have undergone significant downward revision. Conab cut its 2025 arabica estimate by 4.9% to 35.2 million bags, down from a May projection of 37.0 million bags. Total Brazilian coffee production declined 0.9% to 55.2 million bags. However, StoneX projects Brazil’s 2026/27 output will rise 29% year-over-year to 70.7 million bags, including 47.2 million bags of arabica—a substantial increase that could pressure prices ahead.

The USDA’s Foreign Agriculture Service forecasts global 2025/26 coffee production will increase 2.5% year-over-year to a record 178.68 million bags. Robusta production is expected to expand 7.9% to 81.658 million bags, while arabica production declines 1.7% to 97.022 million bags. Ending global stocks are projected to rise 4.9% to 22.819 million bags.

Market Takeaway

Today’s price action reflects competing forces: near-term weather disruptions and inventory constraints support prices, while longer-term production recovery from Brazil and Vietnam threatens to reverse gains. The coffee market faces a transition period where supply tightness gradually gives way to abundance, making tactical positioning challenging for traders navigating both bullish near-term technicals and bearish fundamental dynamics.