Arabica coffee futures remain squeezed between drought conditions in Brazil and tariff barriers in Washington. Unless rainfall improves or a trade agreement lifts the 50% import duty on Brazilian beans, prices are likely to stay near multi-month highs. If dry weather persists and trade talks stall, Arabica could push above $425, while a breakthrough deal or stronger rains could pull it back toward $380.

Key takeaways

• Brazil’s Minas Gerais drought has cut rainfall to roughly 75% of normal levels.
  
• Typhoons Kalmaegi and Fengshen are threatening Vietnam’s robusta output in key growing regions.
  
• U.S. import tariffs have driven exchange inventories to their lowest since 2024.
  
• Vietnam’s record exports of US$8.4 billion have partially offset tightening supply.
  
• La Niña odds at 71% point to more dryness across Brazil into early 2026.
  
• Arabica deficits persist, even as total global coffee output hits record highs.
  

Brazil’s drought deepens the Arabica deficit

Minas Gerais, Brazil’s key Arabica region, has received only 33 mm of rain in late October - about three-quarters of the historical average. The ongoing dryness is threatening flowering and bean development for the 2026/27 crop, according to Somar Meteorologia.

The NOAA has raised the probability of a La Niña weather pattern to 71%, reinforcing the risk of persistent dry conditions. Brazil’s crop forecasting agency Conab cut its 2025 Arabica estimate by 4.9% to 35.2 million bags, with total output trimmed to 55.2 million. Years of erratic rainfall have added a “climate premium” to Arabica prices - a risk factor now permanently embedded in the market.

Trade barriers cause coffee supply shortage

The 50% U.S. import tariff on Brazilian beans, introduced in July 2025 amid a trade spat between Presidents Trump and Lula, has choked off a third of America’s coffee imports. Some traders rerouted cargoes to Canada or paid $20–$25 per bag in cancellation penalties to avoid the duty.

As a result, ICE-monitored Arabica inventories have dropped to around 431,481 bags, the lowest level in nearly two years, while Robusta stocks have declined to 6,053 lots. Retail coffee prices in the U.S. have increased by 41% year-over-year, contributing to food inflation pressures.

Recent comments from both leaders suggest progress. Trump described the latest discussions as “positive,” and Lula has hinted at a “definitive solution” soon. A tariff rollback could restore normal trade flows and provide relief for U.S. roasters by mid-2026.

Vietnam’s robusta boom - and its limits

Vietnam continues to anchor the robusta market. Coffee exports for 2024–25 reached 1.5 million tonnes, valued at US$8.4 billion, a 55% jump in value despite minimal volume growth. Average prices surged 52% to US$5,610 per tonne, reflecting global supply tightness.

Europe was Vietnam’s largest buyer, taking 47% of shipments, led by Germany, Italy, and Spain. Farm-gate prices around VND 116,000–118,000/kg (≈US$4.6) deliver strong profits given production costs of VND 35,000–40,000/kg.

However, weather and input risks persist. Typhoons Kalmaegi and Fengshen threaten heavy rain and landslides in the Central Highlands, while Vicofa warns that any sustained storms could offset expected output growth of 5–10% for 2025/26. The country’s EU-approved “low-risk” status ensures continued market access but cannot shield it from climate volatility.

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Global production: Record high, but shortages remain

The USDA FAS expects global coffee production in 2025/26 to reach a record 178.7 million bags (+2.5%), but the growth is uneven. Arabica output is forecast to decline 1.7% to 97 million bags, while Robusta output is expected to increase 7.9% to 81.7 million. Despite ending stocks rising 4.9% to 22.8 million bags, the balance still points to an Arabica deficit.

Commodity trader Volcafe projects a shortfall of 8.5 million Arabica bags, the fifth consecutive deficit year, larger than last season’s 5.5 million. Supply chain friction, weather damage, and uneven bean quality continue to limit access to premium-grade coffee despite record global totals.

U.S. roasters face an expensive squeeze

U.S. roasters reliant on Brazilian beans are struggling with elevated costs and depleted inventories. Some have diverted shipments to alternative destinations, while others have cancelled contracts outright. Replacement beans from Colombia and Mexico cost around 10% more, leaving smaller roasters especially vulnerable.

Retail coffee prices in the U.S. have climbed from $6–$7 to $11 per pack, and analysts expect stockpiles to fall to 2.5–3 million bags by December - close to critical levels. With tariffs and climate shocks converging, the cost burden continues to ripple from importers to supermarket shelves.

Coffee market analysis and outlook

Bullish scenario: A prolonged drought, a strong La Niña, and stalled U.S.–Brazil negotiations could push Arabica prices above $425, extending the rally into early 2026.

Base case: Partial tariff relief and improved rainfall keep prices contained between $380–$420.

Bearish scenario: A quick trade resolution and larger Vietnamese harvest could push Arabica back toward $350–$370.

Even under the bearish case, analysts expect the long-term price floor to remain elevated, underpinned by climate stress and recurring supply deficits.

Coffee price technical insights

Arabica futures are consolidating near $411.75, maintaining a slightly bullish tone. Price action remains within a range between $390 and $430, with momentum indicators favouring the upside. Bollinger Bands are moderately wide, reflecting ongoing volatility.

Resistance is firm at $430.00, where previous rallies have paused. A close above that level could drive prices toward $445–$450, while a slip below $390.00 may trigger liquidation pressure. The RSI (14), currently around 51, continues to rise from neutral territory, signalling renewed buying momentum.

Coffee price investment implications

Short term: Expect volatility as markets react to shifting headlines on U.S.–Brazil trade talks and rainfall updates from South America. Sharp moves above $425 remain possible.

Medium term: Monitor Vietnam’s harvest data and La Niña intensity for cues on supply direction.

In the long term, structural climate constraints and chronic Arabica shortages are shifting the market’s long-term equilibrium.

Coffee’s rally might cool temporarily, but political uncertainty and climate risks ensure that volatility - much like caffeine - remains part of the blend.