Vietnamese Coffee Supplies Tighten as Weather Disruptions Fuel Price Rally

Weather-Driven Market Shift

Coffee futures markets are showing pronounced strength today, with robusta coffee futures climbing 107 points to achieve a 2-week peak, while arabica contracts gained 0.57% in afternoon trading. The price momentum reflects ongoing supply uncertainties across major producing regions and shifting market dynamics.

Vietnam, the world’s preeminent robusta coffee producer, faces significant harvest delays following heavy precipitation in Dak Lak province, the nation’s largest coffee cultivation hub. Weather forecasts indicate additional rainfall ahead, raising concerns about potential crop damage during the critical harvest season. These meteorological challenges have become the primary support driver for robusta prices, with traders reassessing near-term supply availability.

Production Outlook and Export Dynamics

Vietnam’s coffee sector is displaying mixed signals for the coming season. January through October 2025 saw coffee exports increase 13.4% year-over-year to 1.31 million metric tons, indicating continued commercial momentum. However, Vietnam’s projected 2025/26 output of 1.76 million metric tons represents a 6% increase, reaching a 4-year high of approximately 29.4 million bags according to industry estimates.

The Vietnam Coffee and Cocoa Association suggests that if favorable weather conditions persist, output could surge 10% higher than the previous crop year. Yet the immediate harvest disruptions pose a tactical constraint on near-term supply flows to international markets.

Brazilian Supply Expansion Weighing on Sentiment

On the arabica front, Brazil presents a contrasting supply picture. StoneX’s latest forecasting model projects Brazilian coffee production in 2026/27 will reach 70.7 million bags, including 47.2 million bags of arabica—representing a significant 29% year-over-year expansion. This anticipated supply surge introduces longer-term bearish pressure on arabica valuations.

Earlier in the marketing year, Brazil’s coffee crop estimates underwent revisions. Conab, Brazil’s official crop forecasting bureau, reduced its 2025 arabica crop estimate by 4.9% to 35.2 million bags compared to May projections. Total Brazilian 2025 coffee production slipped 0.9% to 55.2 million bags, suggesting that recent gains may face headwinds as new crop supplies materialize.

Global Inventory Tightening

Warehouse stocks have become increasingly constrained. ICE-monitored arabica coffee inventories fell to 1.75-year lows of 396,513 bags this week, while robusta stockpiles declined to 4-month lows of 5,640 lots, reflecting significant drawdowns in available supplies. This inventory compression is underpinning price floors.

The drawdown stems partly from U.S. tariff policies affecting Brazilian coffee imports. American coffee buyers have sharply reduced new purchase contracts for Brazilian beans due to the 40% tariffs imposed on Brazil, causing a 52% decline in U.S. coffee purchases from August through October 2025 compared to the same period last year—falling to just 983,970 bags.

Currency and Tariff Dynamics

A weaker U.S. dollar has prompted short-covering in arabica contracts, adding technical support to prices. The Trump administration’s tariff framework creates complexity for importers: while 10% reciprocal tariffs on certain commodities were waived, the separate 40% tariff on Brazil based on “national emergency” grounds remains in effect. Clarity on tariff exemptions for coffee importers remains outstanding, keeping market participants cautious.

Global Supply-Demand Framework

The International Coffee Organization reported on November 7 that global coffee exports for the current marketing year (October-September) declined 0.3% year-over-year to 138.658 million bags, signaling tighter market conditions despite rising production forecasts.

The USDA Foreign Agriculture Service projects world coffee production in 2025/26 will increase 2.5% to a record 178.68 million bags. Arabica output is expected to slip 1.7% to 97.022 million bags, while robusta production climbs 7.9% to 81.658 million bags. Brazil’s output is forecast to grow 0.5% to 65 million bags, while Vietnam’s harvest is expected to reach 31 million bags—a 4-year high representing 6.9% growth.

Market Outlook

Price movements today reflect a complex interplay of weather risk in Vietnam, expanding supply pipelines from Brazil, constrained warehouse stocks, and policy uncertainty surrounding U.S. tariffs. The collision between near-term supply disruptions and longer-term production expansions is likely to sustain volatility in coffee futures as the market reconciles these competing forces.