Brazil's Weather Woes Push Arabica Coffee Prices Higher Amid Volatile Market Conditions

Arabica coffee markets experienced significant volatility on Monday, with March contracts surging 7.10 points (1.92%) while January robusta futures declined 53 points (1.18%). The divergent price movement reflects distinct supply pressures facing the two coffee varieties across their primary growing regions.

Drought Concerns Drive Arabica Coffee Strength

Brazil’s arabica coffee sector faced renewed pressure from unfavorable weather patterns. Somar Meteorologia’s latest assessment revealed that Minas Gerais—the nation’s premier arabica coffee-producing province—received only 26.4 mm of precipitation during the seven-day period ending November 21. This represents merely 49% of the region’s historical rainfall average, raising immediate concerns about crop stress during the critical growing season.

The moisture deficit triggered immediate market response, pushing arabica coffee contracts sharply upward as traders reassessed production risks. This weather-driven rally came despite broader tariff relief announced last Friday when President Trump’s executive order exempted Brazilian agricultural products, including coffee, from the previously threatened 40% import duties.

Robusta Pressured by Improved Vietnamese Harvest Conditions

Robusta coffee exhibited weakness amid forecasts predicting drier conditions in Vietnam’s coffee zones. Paradoxically, these weather expectations represent bullish signals for harvest progression rather than crop damage. Excessive rainfall had previously disrupted harvesting operations in Dak Lak, Vietnam’s largest coffee-producing area, and clearing skies are expected to facilitate crop collection resumption.

Inventory Dynamics Support Price Floors

Tightening warehouse supplies have emerged as a critical price-support mechanism across both arabica coffee and robusta segments. ICE arabica coffee inventories plummeted to a 1.75-year low of 398,645 bags last Thursday, while robusta stockpiles fell to a 4.5-month minimum of 5,370 lots on Monday. These inventory contractions reflect substantial demand destruction triggered by tariff uncertainties—American coffee importers cancelled approximately 983,970 bags of Brazilian coffee purchases from August through October, representing a 52% decline year-over-year. Since roughly one-third of America’s unroasted coffee originates from Brazil, this import collapse has significantly reduced supply availability in US distribution channels.

Conflicting Signals in Production Outlook

Looking ahead, production forecasts present competing narratives. StoneX projected that Brazil will generate 70.7 million bags during the 2026/27 marketing year, including 47.2 million bags of arabica coffee—a 29% year-over-year increase that would substantially outweigh current supply tightness. However, more immediate concerns stem from Conab’s September reduction of Brazil’s 2025 arabica coffee crop estimate by 4.9% to 35.2 million bags.

Vietnam’s supply trajectory moves in the opposite direction. The Vietnam National Statistics Office reported that coffee exports through October 2025 expanded 13.4% year-over-year to 1.31 million metric tons, while 2025/26 production is projected to climb 6% annually to 1.76 million metric tons (29.4 million bags)—approaching a 4-year high. Vietnam’s coffee industry associations estimate potential production increases of 10% if favorable weather conditions persist.

Global Supply Tightening Creates Counterbalance

Broader global trade data revealed that total coffee exports for the current marketing year fell marginally by 0.3% year-over-year to 138.658 million bags, according to the International Coffee Organization. Meanwhile, the USDA’s Foreign Agriculture Service forecasts that 2025/26 global production will increase 2.5% to a record 178.68 million bags, though arabica output specifically faces a 1.7% decline to 97.022 million bags, offset by 7.9% robusta growth to 81.658 million bags.

The arabica coffee market now stands at a critical juncture where near-term supply constraints and weather uncertainties compete against medium-term production recoveries and tariff relief for Brazilian exports. Price direction will likely depend on which factor—immediate supply tightness or longer-term abundance signals—commands market participants’ attention.