Vietnamese Coffee Supply Tightness Propels Robusta Futures Higher

Supply Squeeze Ignites Market Momentum

Robusta coffee futures posted a notable 2.37% gain today, hitting a two-week peak, while arabica contracts advanced 0.57%. The market’s upward trajectory reflects a complex interplay of supply constraints and external shocks across the world’s major coffee-producing regions.

The surge in Vietnamese coffee valuations stems from immediate production headwinds. Heavy precipitation in Dak Lak province—Vietnam’s premier coffee-growing hub—has disrupted harvest operations, with meteorologists predicting additional rainfall that threatens crop quality and yield. As the globe’s leading robusta supplier, any disruption in Vietnamese output carries outsized implications for international pricing dynamics.

Global Inventory Compression Reshapes Price Floor

Storage levels paint an increasingly tight picture. ICE arabica coffee holdings plummeted to a 1.75-year nadir of 396,513 bags this week, while robusta inventory slipped to a 4-month trough of 5,640 lots. This drawdown reflects structural changes in import flows—American purchasers have substantially reduced commitments for Brazilian coffee amid tariff complications, with August-October imports from Brazil declining 52% year-over-year to 983,970 bags.

The International Coffee Organization documented global export volumes at 138.658 million bags for the current marketing cycle, marginally down 0.3% annually, signaling persistent tightness in available supplies worldwide.

Production Outlook: Divergent Regional Signals

Brazilian dynamics present a mixed picture. While Conab, the government’s crop agency, trimmed its 2025 arabica estimate to 35.2 million bags (down 4.9% from May’s projection), StoneX projects the 2026/27 season will see production climb to 70.7 million bags total, including 47.2 million bags of arabica—representing a 29% year-over-year expansion.

Vietnamese coffee production, conversely, continues its upward arc. The nation’s 2025/26 output is forecast to reach 1.76 MMT—a four-year high and 6% increase annually—with exports through October already up 13.4% year-over-year to 1.31 million metric tons. The Vietnam Coffee and Cocoa Association projects a potential 10% production boost if weather cooperates.

The USDA’s Foreign Agriculture Service anticipates 2025/26 global production will reach a record 178.68 million bags, with robusta expanding 7.9% to 81.658 million and arabica contracting 1.7% to 97.022 million.

Policy Headwinds and Weather Catalysts

Tariff pressures continue complicating Brazilian supply chains. While Trump administration actions removed certain commodity tariffs, the 40% rate imposed on Brazilian imports on “national emergency” grounds remains in effect for coffee imports, creating uncertainty around cost structures for American importers. This policy backdrop has accelerated inventory draw-downs at regulated exchanges.

Weather patterns also warrant monitoring. Brazil’s Minas Gerais region—the country’s largest arabica zone—received only 42% of normal rainfall in the period ending November 14, raising concerns about crop stress. However, subsequent forecasts call for substantial rains across Brazilian coffee zones, potentially alleviating near-term drought concerns but introducing new timing uncertainties.

Market Takeaway

The confluence of shrinking accessible supplies, Vietnamese production disruptions, and persistent tariff-related friction is cementing a floor under coffee valuations. While medium-term Brazilian production growth may provide eventual relief, the near-term calculus favors continued support for both arabica and robusta contracts, particularly as Vietnamese coffee faces weather-related near-term constraints.