Global Coffee Markets Face Mixed Signals Amid Brazil's Wet Forecast and Rising Vietnamese Supply

Coffee futures experienced sharp declines on Wednesday as traders digested conflicting signals from major producing regions. March arabica coffee closed down 3.31% at 12.85 cents per pound, while January ICE robusta contracts fell 1.25% to 57 points, as precipitation expectations in Brazil’s coffee-growing regions weighed on sentiment.

Weather Patterns and Supply Dynamics

Climatempo’s forecast of heavy showers heading into the following week across Brazil’s primary coffee zones triggered the sell-off, as adequate moisture typically supports crop development and eases supply concerns. This appeared to reverse gains accumulated over the prior two sessions, when geopolitical tariff uncertainty had underpinned prices.

However, the near-term weather picture remains nuanced. Early November data showed Brazil’s Minas Gerais region—the nation’s largest arabica-producing area—received only 19.8 mm of rainfall during the week ending November 14, representing just 42% of historical norms, suggesting moisture deficits may still constrain development in key zones.

Inventory Tightness Amid Trade Friction

Despite Wednesday’s weakness, structural support persists from shrinking warehouse stocks. ICE-monitored arabica inventories hit a 1.75-year low of 396,513 bags on Tuesday, while robusta stocks touched a 4-month floor of 5,648 lots Monday. These declines directly reflect the impact of US tariff policy—the Trump administration’s 40% levy on Brazilian coffee imports has triggered a 52% year-over-year collapse in American purchases during August-October, dropping to 983,970 bags.

The tariff regime has fundamentally reshaped import patterns. While the administration dropped 10% reciprocal tariffs on non-domestically produced commodities including coffee, the broader 40% rate on Brazilian shipments—justified on “national emergency” grounds—remains in effect for most purchasers. This uncertainty has prompted American importers to liquidate Brazilian coffee contracts, thereby tightening US supplies despite Brazil accounting for roughly one-third of American unroasted coffee consumption.

Production Outlook and Global Supply Pressures

Looking ahead, production forecasts paint a bullish-bearish mosaic. Brazil’s 2026/27 output is projected at 70.7 million bags—including 47.2 million arabica—representing a 29% year-over-year jump, suggesting ample supplies on the horizon. Yet this conflicts with recent crop downgrades: Brazil’s 2025 arabica estimate was reduced 4.9% to 35.2 million bags in September, while total 2025 production fell 0.9% to 55.2 million bags.

Vietnamese production offers another wildcard. The Vietnam Coffee and Cocoa Association projects 2025/26 output 10% above the prior crop if weather cooperates, while official statistics showed January-October 2025 exports rose 13.4% year-over-year to 1.31 million metric tons. Production is slated to climb 6% year-over-year to 1.76 million metric tons (29.4 million bags)—a 4-year high—cementing Vietnam’s role as the world’s largest robusta supplier and injecting additional downward price pressure.

Global Context

The International Coffee Organization reported that global coffee exports for the current marketing year fell marginally, declining 0.3% year-over-year to 138.658 million bags. The USDA Foreign Agriculture Service projects 2025/26 world production rising 2.5% to a record 178.68 million bags, with arabica supplies down 1.7% but robusta up 7.9%, while ending stocks are forecast to climb 4.9% to 22.819 million bags.

After Rain Quotes Reflect Shifting Equilibrium

As after rain quotes continue to circulate among traders, the Wednesday decline underscores how quickly sentiment can pivot between supply tightness and abundance. With Brazilian weather patterns stabilizing and Vietnamese harvests accelerating, near-term weakness appears likely despite inventory constraints. Medium-term after rain forecasts and emerging production data will dictate whether current price levels find support or face further downside as the market recalibrates to elevated global supplies arriving in coming quarters.