Coffee Rally Fueled by Vietnam's Weather Crisis and Brazil's Tariff Headwinds

Coffee futures are surging today—arabica up 0.57% and robusta jumping 2.37% to a 2-week high—but the drivers behind the rally reveal a market caught between supply tightening and geopolitical turbulence.

Vietnam’s Wet Season Threatens Robusta Supply

Heavy monsoon rains have hammered Vietnam’s Dak Lak province, the world’s largest robusta-growing region, delaying harvests and raising crop damage concerns. This is hitting at a critical time: Vietnam’s 2025/26 production is already projected to hit 1.76 million metric tons (29.4 million bags)—a 4-year high—and the coffee industry association says output could surge 10% higher if weather cooperates. Today’s wet forecast just cut into that upside scenario, sending robusta prices higher.

The Brazil-US Tariff Trap

While dollar weakness is prompting short covering in arabica, the real story is Brazil’s tariff crisis. The Trump administration dropped reciprocal tariffs on coffee last week, but a separate 40% emergency tariff on Brazilian goods remains in limbo—and US importers still don’t know if they’re exempt. The result? American buyers are already fleeing Brazilian coffee contracts.

US imports from Brazil dropped 52% year-over-year in Aug-Oct 2025, crashing to just 983,970 bags. Since Brazil supplies roughly one-third of America’s unroasted coffee, this tariff-driven supply squeeze is tightening US inventory sharply:

• ICE arabica stocks hit a 1.75-year low of 396,513 bags
• ICE robusta stockpiles fell to a 4-month low of 5,640 lots

Production Outlook: Good News and Bad News

Brazil’s 2026/27 crop is forecast to balloon 29% year-over-year to 70.7 million bags (including 47.2M arabica), thanks to favorable rains in Minas Gerais. But near-term, Brazil’s 2025 arabica estimate was cut 4.9% to 35.2 million bags by Conab in September—signaling current tightness.

Globally, the International Coffee Organization reported that Oct 2024-Sep 2025 coffee exports fell 0.3% year-over-year to 138.658 million bags, suggesting supply remains under pressure despite record production growth forecasts.

The Bottom Line

Coffee prices are caught in a supply-demand squeeze: Vietnam’s weather risk and Brazil’s tariff chaos are pushing prices higher in the near term, but massive production growth on the horizon (USDA projects 2025/26 global output at a record 178.68 million bags, +2.5% YoY) could cap the rally eventually. Watch the tariff clarity on Brazilian imports—that’s the real tail risk.