Coffee futures plummeted today: Arabica fell by 1.38%, and Robusta fell by 1.03%. The main reason is that the EU has cut the 1-year implementation period of the Deforestation Regulation (EUDR), which means that global coffee supply will remain abundant.

However, the fall is limited due to several support factors:

1. Brazil faces severe drought pressure - Minas Gerais (the world's largest Arabica production area) received only 49% of the historical average rainfall last week.

2. Inventory contraction - ICE Arabica stocks have fallen to a 1.75-year low (398,000 bags), and Robusta stocks have dropped to a 6-month low.

3. Vietnam has good news - the production is expected to reach 17.6 million tons in 2025/26, setting a new four-year high.

But there are also many bearish factors: Brazil's production is expected to increase by 29% year-on-year in 2026/27, and global coffee inventories are also accumulating. Last week, Trump signed an exemption order, lifting the Brazilian coffee tariff from 40%. In the short term, the supply side remains a suppressive factor.