December arabica coffee (KCZ25) on Wednesday closed down -4.75 (-1.19%), and November ICE robusta coffee (RMX25) closed up +55 (+1.23%).
Coffee prices gave up an early advance today and turned mixed, with arabica retreating from a 4-week high. Updated weather forecasts are calling for rain later this week in Brazil's coffee-growing regions, sparking a surge in liquidation of coffee futures.
Losses in arabica coffee accelerated on Wednesday after Bloomberg News reported that Brazil's Foreign Affairs Minister Vieira is to meet with US Secretary of State Rubio on Thursday to discuss tariffs.
Arabica coffee prices initially rose to a 4-week high on Wednesday due to indications of severe dry conditions in Brazil's primary coffee-growing region. Somar Meteorologia reported Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received 20.2 mm of rain during the week ended October 11, or 48% of the historical average. The dry weather has sparked concerns about the crop during the critical flowering phase of Brazil's 2026/27 coffee crop.
Coffee prices also have support due to shrinking ICE coffee inventories. The 50% tariffs imposed on US imports from Brazil have led to a sharp drawdown in ICE coffee inventories, a bullish factor for coffee prices. ICE-monitored arabica inventories fell to a 1.5-year low of 494,558 bags on Wednesday, and ICE robusta coffee inventories fell to a 2.75-month low of 6,200 lots. American buyers are voiding new contracts for purchases of Brazilian coffee beans due to the 50% tariffs imposed on US imports from Brazil, thereby tightening US supplies, as about a third of America's unroasted coffee comes from Brazil.
Coffee prices also garnered support after the National Oceanic and Atmospheric Administration (NOAA) on September 16 increased the likelihood of a La Niña weather system in the southern hemisphere from October to December to 71%, which could bring excessive dry weather to Brazil and harm the 2026/27 coffee crop. Brazil is the world's largest producer of arabica coffee.
Abundant rain in Vietnam is bearish for robusta coffee prices. Vietnam's Central Highlands, the country's major coffee-producing region, is expected to receive above-average rainfall through October 20, which should support crop development and coffee yields. The Dak Lak province, the country's largest coffee-growing area, is forecast to get 70 mm of rain over the next week compared with a historical average of 61.3 mm.
Robusta coffee is also under pressure due to an increase in coffee supplies from Vietnam. The Vietnam National Statistics Office reported Monday that Vietnam's Jan-Sep 2025 coffee exports were up +10.9% y/y to 1.230 MMT.
Stronger coffee exports are bearish for prices after the International Coffee Organization (ICO) reported last Monday that global coffee exports for the current marketing year (Oct-Aug) rose +0.2% y/y to 127.92 million bags, indicating adequate exports and supplies.
Coffee prices found support after Conab, Brazil's crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate on September 4 by -4.9% to 35.2 million bags from a May forecast of 37.0 million bags. Conab also reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, from a May estimate of 55.7 million bags.
A bumper robusta coffee crop in Vietnam is bearish for prices. Vietnam's 2025/26 coffee production is projected to climb +6% y/y to 1.76 MMT, or 29.4 million bags, a 4-year high. Vietnam is the world's largest producer of robusta coffee.
The USDA's Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 will increase by +2.5% y/y to a record 178.68 million bags, with a -1.7% decrease in arabica production to 97.022 million bags and a +7.9% increase in robusta production to 81.658 million bags. FAS forecasted that Brazil's 2025/26 coffee production will increase by +0.5% y/y to 65 million bags and that Vietnam's 2025/26 coffee output will rise by 6.9% y/y to a 4-year high of 31 million bags. FAS forecasts that 2025/26 ending stocks will climb by +4.9% to 22.819 million bags from 21.752 million bags in 2024/25. However, Volcafe is projecting a global 2025/26 arabica coffee deficit of -8.5 million bags, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.
