Coffee Futures Rally on Twin Supply Shocks

Arabica and robusta coffee both finished higher Thursday amid tightening supplies. March arabica climbed +1.80 (+0.48%) while January robusta surged +115 (+2.55%) to a 2-week peak.

The moves reflect conflicting forces: Near-term tightness vs long-term abundance.

What’s pushing prices up:

• Vietnam hit by heavy rains in Dak Lak province (top growing region), threatening crop damage
• US tariffs on Brazilian coffee causing import collapse: US coffee purchases from Brazil dropped 52% (Aug-Oct 2025 vs prior year) to just 984k bags
• ICE inventories cratering—arabica stocks hit 1.75-year lows at 398k bags; robusta at 4-month lows
• Dollar weakness triggering short covering in arabica

The bearish undercurrent:

• Brazil’s 2026/27 output forecast at record 70.7M bags (+29% YoY), including 47.2M arabica
• Vietnam robusta production climbing 6% to 1.76M tons in 2025/26 (4-year high)
• Global coffee exports still modest at 138.66M bags (only -0.3% YoY decline)

The real story: Tariffs are creating artificial supply crunches in the US market while global inventories remain elevated. When/if Trump administration clarifies the 40% Brazil tariff situation, expect volatility.