Brazil Rain Forecast Hits Coffee Futures—But Here's Why Prices May Stay Tight

Coffee futures took a hit today as forecasters predict heavy rainfall across Brazil’s growing regions through next week. March arabica dropped 2.70% and January robusta fell 1.03%—typical bearish reaction to crop-friendly weather.

But dig deeper and the picture gets complicated.

The Tariff Wildcard

Coffee prices had rallied hard recently because Brazilian exports face a brutal 40% US tariff (on top of the 10% reciprocal tariff that was supposed to be lifted). The result? American importers have basically stopped buying—US purchases of Brazilian coffee plummeted 52% from Aug-Oct vs. last year, falling to just 984k bags.

This tariff shock has squeezed US supply to levels not seen in 1.75 years. ICE arabica inventories hit 396k bags Tuesday (a 21-month low), while robusta stockpiles fell to 4-month lows. That’s real supply tightness, even if weather improves.

Global Supply Maze

The plot thickens when you zoom out:

• Vietnam on the rise: World’s largest robusta producer expects output to jump 6% to 1.76M metric tons in 2025/26—potentially a 4-year high. Jan-Oct exports already up 13.4% YoY.

• Brazil bouncing back: StoneX projects Brazil’s 2026/27 harvest will hit 70.7M bags (+29% YoY), but that’s for next crop year. Current 2025 output was cut 4.9% by Conab to 35.2M bags arabica.

• Global exports contracting: ICO reported Oct-Sep exports fell 0.3% YoY to 138.7M bags—first decline in a while.

The kicker? USDA expects world inventories to still climb 4.9% despite production growth, suggesting oversupply could emerge if tariffs ease.

The Bottom Line

Today’s rain forecast is textbook bearish for near-term prices. But structural factors—US import walls, Vietnamese competition, and near-term supply crunches—create a volatile, policy-dependent market. Rain helps crops. Tariffs help prices. Twist one policy lever and forecasts flip.

Watch the Trump administration’s next tariff clarification closely—coffee traders more than anyone.