Vietnam's Flooding and Global Supply Tensions Push Robusta Coffee to 2-Week Peaks

Robusta coffee futures are experiencing notable upward momentum today, with January ICE robusta contracts gaining +107 points (+2.37%), reaching their strongest levels in two weeks. The concurrent strength in March arabica (up +0.57%) reflects broader market dynamics, though the drivers differ significantly between the two coffee varieties.

Weather Disruptions Tighten Robusta Supplies

Heavy rainfall affecting Vietnam’s Dak Lak province—the nation’s primary coffee-growing region—is creating immediate supply concerns for robusta production. Additional precipitation is forecast through the coming weeks, threatening potential crop damage during a critical harvest window. Vietnam, as the world’s dominant robusta coffee producer, commands outsized influence over global robusta pricing through its production volume and export flows.

The contrast between arabica and robusta directions stems partly from divergent weather patterns. While rain concerns in Vietnam bolster robusta prices, Brazilian precipitation forecasted by Climatempo toward week’s end is viewed as supportive for arabica crop development, creating downward price pressure on that variety.

Supply Constraints Across the Market

Global coffee inventory metrics underscore genuine tightness in the physical market. ICE arabica stocks plummeted to a 1.75-year low of 396,513 bags by Tuesday, while robusta inventories contracted to a 4-month minimum of 5,640 lots today. These drawdowns reflect structural purchasing patterns: US buyers have substantially reduced new Brazilian coffee contracts in response to tariff pressures, with American imports of Brazilian coffee dropping 52% year-over-year during the August-October period when tariffs took effect.

Vietnam’s export momentum, meanwhile, paints a more complex picture. The country shipped 1.31 million metric tons of coffee during January-October 2025, a +13.4% year-over-year increase. Production projections for 2025/26 suggest a climb to 1.76 million metric tons (29.4 million bags)—a four-year high—contingent on favorable weather patterns.

Production Forecasts Create Mixed Signals

The International Coffee Organization reported that global coffee exports for the current marketing year fell 0.3% year-over-year to 138.658 million bags, indicating modest supply pressures. However, longer-term production forecasts paint a more abundant picture. Brazil is projected to produce 70.7 million bags in 2026/27 (a +29% annual increase), while USDA projections for 2025/26 suggest world coffee production will expand +2.5% year-over-year to a record 178.68 million bags.

Arabica production specifically is expected to decline slightly by -1.7% to 97.022 million bags, while robusta production rises +7.9% to 81.658 million bags, reflecting structural shifts in global coffee cultivation.

Currency and Tariff Dynamics

Underlying arabica strength earlier in the week partly reflected dollar weakness prompting short-covering activity. However, tariff uncertainty remains a central concern: while the Trump administration removed reciprocal tariffs on non-US-grown commodities including coffee, Brazilian coffee still faces a separate 40% tariff on “national emergency” grounds. The status of exemptions for US coffee importers remains unresolved, creating purchasing hesitation that has dramatically reduced US inventory builds from Brazilian sources.

Market Trajectory

Current price action reflects competing forces—near-term robusta supply anxiety against medium-term production abundance. The tightening of monitored coffee stocks globally, combined with immediate weather threats to Vietnam’s harvest, is providing price support today, while longer-dated supply expectations from Brazil and Vietnam suggest potential headwinds for sustained price elevation.