Weather Disruptions Trigger Coffee Market Rally Amid Supply Concerns

Coffee markets are experiencing a significant price surge driven by escalating weather challenges affecting major producing regions. March arabica coffee futures jumped +4.55 (+1.21%), while January ICE robusta contracts climbed +105 (+2.36%), signaling heightened concern about near-term supply availability.

Weather Shocks Reshape Supply Dynamics

Brazil’s arabica production faces mounting pressure from drought conditions. Minas Gerais, accounting for the largest share of Brazilian arabica cultivation, received only 26.4 mm of rain during the week ending November 21—just 49% of historical norms, according to Somar Meteorologia. This moisture deficit threatens crop development during a critical growth phase.

Vietnam’s robusta sector confronts a different weather challenge. Forecasters predict heavy precipitation in Dak Lak province, the nation’s principal coffee-growing territory, which threatens to postpone harvesting operations and complicate logistics. As the world’s dominant robusta producer, Vietnam’s production delays reverberate through global supply chains.

Inventory Compression Amplifies Price Support

Storage drawdowns underscore tightening market conditions. ICE arabica inventories plummeted to a 1.75-year low of 398,645 bags last Thursday, reflecting reduced availability despite growing global demand. Robusta stocks fell to a 4.5-month low of 5,134 lots, indicating sellers are unwilling to part with supplies at current price levels.

U.S. tariff policies accelerated this inventory compression. American coffee buyers significantly reduced orders for Brazilian supplies following import duties, with U.S. coffee purchases from Brazil dropping 52% year-over-year (to 983,970 bags) during August through October 2025. This contraction matters because approximately one-third of American unroasted coffee originates from Brazil, making tariff impacts structurally meaningful for domestic supply.

Production Forecasts Paint Conflicting Pictures

Brazil’s 2026/27 outlook presents a mixed narrative. StoneX projects Brazilian coffee output will reach 70.7 million bags next marketing year—a +29% year-over-year increase including 47.2 million bags of arabica. However, this bullish production forecast competes with current supply tightness, suggesting price volatility may persist through the harvest transition.

By contrast, Vietnam’s production trajectory supports sustained supply gains. The Vietnam National Statistics Office reported that January-October 2025 coffee exports rose +13.4% year-over-year to 1.31 million metric tons. Production is projected to climb 6% annually to 1.76 million metric tons (29.4 million bags), marking a 4-year high. The Vietnam Coffee and Cocoa Association indicated output could increase another 10% if favorable weather prevails.

Broader Market Context

Global coffee exports through November 2025 showed modest weakness, according to the International Coffee Organization, declining 0.3% year-over-year to 138.658 million bags for the current marketing year. The USDA’s Foreign Agriculture Service forecasts 2025/26 world production will rise +2.5% to a record 178.68 million bags, with arabica production declining 1.7% while robusta supplies expand 7.9%.

The interplay between near-term supply disruptions from adverse weather conditions and longer-term production recoveries creates a complex market backdrop. Near-term inventory pressure and crop delays support elevated prices, while medium-term production growth suggests potential normalization once weather stabilizes and new crop supplies enter distribution channels.