Coffee Prices Tumble on Brazil Rains and Higher Vietnam Coffee Exports

Coffee prices, including December Arabica and January Robusta, fell sharply today, with Robusta reaching a one-week low, primarily due to forecasts of steady rainfall in Brazil easing dry condition concerns for Arabica. Further pressure comes from increased Vietnamese supplies, with Jan-Oct 2025 exports up 13.4% year-over-year and 2025/26 production projected to climb 6% to a four-year high. Speculation about the US potentially lifting its 50% tariff on Brazilian coffee also contributed to Arabica's decline, outweighing underlying support from shrinking ICE inventories and previous crop estimate cuts.

Analysis

December arabica and January robusta coffee futures experienced sharp declines of -3.35% and -3.24% respectively, with robusta hitting a one-week low. This downturn is primarily driven by improved weather forecasts for Brazil, easing concerns over dry conditions for arabica, alongside increased robusta supplies from Vietnam. Vietnam's Jan-Oct 2025 coffee exports surged +13.4% year-over-year, with 2025/26 production projected to climb +6% to a four-year high of 1.76 MMT.

Further pressure on arabica stems from speculation regarding a potential lifting of the 50% US tariff on Brazilian coffee, which could significantly increase supply to the US market. Despite these bearish catalysts, underlying support for coffee prices persists from critically low ICE inventories, with arabica at a 1.75-year low of 429,770 bags and robusta at a 3.5-month low of 6,030 lots. The existing US tariffs on Brazilian coffee have contributed to this inventory drawdown and tightened US supplies.

Conflicting signals emerge from longer-term supply outlooks; while the USDA FAS projects a +2.5% increase in world coffee production for 2025/26 to a record 178.68 million bags, this includes a -1.7% decrease in arabica production offset by a +7.9% increase in robusta. Conab had previously cut Brazil's 2025 arabica crop estimate by -4.9% to 35.2 million bags, highlighting ongoing regional supply concerns. The potential for a La Niña weather system also poses a risk for Brazil's 2026/27 crop.

Key Decisions for Investors

• Monitor weather developments in key coffee-producing regions, particularly Brazil's rainfall patterns and potential typhoon impacts in Vietnam, as these are critical short-term price drivers.
• Assess the likelihood and impact of a potential lifting of the 50% US tariff on Brazilian coffee, which could significantly alter arabica supply dynamics and pricing.
• Evaluate the diverging supply outlooks for arabica and robusta, considering robusta's projected production increase against arabica's persistent inventory lows and regional crop estimate cuts.