Coffee Prices Surge: Vietnam's Flooding Triggers Global Supply Crunch

Coffee futures are heating up today with robusta jumping to a 2-week high (+2.37%), while arabica climbed +0.57%. The rally reflects a perfect storm of bullish catalysts that’s reshaping global supply dynamics.

Vietnam’s Weather Crisis Fuels Robusta Spike

Heavy rains have hammered Vietnam’s Dak Lak province—the country’s coffee heartland—delaying harvests and threatening crop damage. This is critical because Vietnam dominates global robusta production. The timing couldn’t be worse: forecasts show more showers incoming, which could compound losses. ICE robusta inventories are already squeezed at a 4-month low of 5,640 lots, signaling tight supplies.

Brazil’s Tariff Turbulence

Meanwhile, the Trump administration’s 40% tariff on Brazilian coffee has turned the US market upside down. US importers are dumping Brazilian contracts to avoid the hit, causing ICE arabica inventories to plunge to a 1.75-year low of 396,513 bags. Here’s the kicker: US imports of Brazilian coffee crashed 52% (Aug-Oct period vs. last year) to just 983,970 bags. With Brazil supplying roughly a third of America’s unroasted coffee, this tariff war is creating artificial scarcity.

Supply Tightening vs. Production Outlook

Global coffee exports actually fell 0.3% year-over-year to 138.658 million bags—a rare tightening that’s supportive. However, the outlook is mixed: Brazil’s 2025/26 production is projected to surge 29% to 70.7 million bags, while Vietnam’s output climbs 6% to 1.76 MMT. But near-term disruptions from weather and tariffs are keeping prices elevated.

What’s Priced In?

The USDA forecasts global 2025/26 production will hit a record 178.68 million bags, with robusta up 7.9%. Yet current price action suggests markets are fixated on immediate supply crunches rather than longer-term abundance. Arabica remains under pressure from potential Brazilian rains that could boost crop development, but tariff uncertainty and inventory depletion are offsetting that bearish factor.

Bottom line: Short-term supply disruptions are winning the narrative. Expect continued volatility as traders navigate weather forecasts, tariff clarifications, and inventory data.