Brazil's Coffee Crunch Sends New York Prices Volatile Amid Supply Tug-of-War

New york coffee price volatility continues to intensify as December arabica futures (+1.14%) and November robusta contracts (-1.85%) reflect a classic supply-demand squeeze. After hitting an 8.75-month high last Thursday, prices plunged to a fresh 2-week low before recovering on short-covering, signaling deep uncertainty in the market.

The Supply Crisis Nobody’s Talking About

Brazil’s drought is the elephant in the room. Minas Gerais, which produces most of the world’s arabica coffee, received just 0.3mm of rain during the week ending October 24—a mere 1% of normal. Bloomberg’s weather analysis confirms the state has only captured 70% of average rainfall over the past month, threatening the critical flowering period for next year’s crop.

Yet Vietnam is flooding the market with the opposite problem: oversupply. Vietnam’s 2025/26 coffee production is projected to hit 1.76 MMT (29.4 million bags), a 4-year high and 6% increase year-over-year. Their January-September exports already climbed 10.9% to 1.230 MMT, signaling Vietnam’s robusta output remains abundant despite price pressures.

When Inventory Numbers Scream Warning Signs

ICE arabica inventories plunged to a 1.5-year low of 447,773 bags last Friday before ticking up slightly to 450,743 bags on Monday. Meanwhile, robusta stockpiles hit a 3-month low of 6,122 lots. These weren’t natural declines—American buyers are actively dodging new Brazilian coffee contracts due to the 50% US tariffs, forcing supply constraints upstream since roughly one-third of America’s unroasted coffee originates from Brazil.

The Trade Policy Wildcard

President Lula da Silva claimed a “surprisingly good” meeting with President Trump, hinting at a possible “definitive solution” to US-Brazil trade tensions within days. If the 50% tariff lifts, expect a flood of deferred Brazilian coffee shipments into the US market, which could reshape new york coffee price dynamics entirely.

The Bigger Picture: Global Production Shifts

The USDA projects world coffee production climbing 2.5% to a record 178.68 million bags in 2025/26, but the mix matters: arabica output will drop 1.7% to 97.022 million bags while robusta surges 7.9% to 81.658 million bags. This structural shift toward cheaper robusta reflects Vietnam’s dominance but doesn’t solve Brazil’s 2026/27 crop uncertainty.

NOAA raised La Niña probability to 71% for October-December, which could intensify Brazil’s drought and threaten next season’s flowering. Meanwhile, Conab already slashed Brazil’s 2025 arabica forecast by 4.9% to 35.2 million bags back in September.

The coffee market sits at an inflection point: tight supplies today clashing with potential oversupply tomorrow, all while weather, tariffs, and geopolitical tensions rewrite the rules daily.