December arabica coffee (KCZ25) on Wednesday closed up +9.70 (+2.58%), and November ICE robusta coffee (RMX25) closed up +128 (+2.90%).

Coffee prices settled sharply higher on Wednesday as ICE coffee inventories continue to shrink.  The 50% tariffs imposed on US imports from Brazil have led to a sharp drawdown in ICE coffee inventories, a bullish factor for coffee prices.  ICE-monitored arabica inventories fell to a 1.5-year low of 525,989 bags on Wednesday, and ICE robusta coffee inventories fell to a 2.5-month low of 6,237 lots.  American buyers are voiding new contracts for purchases of Brazilian coffee beans due to the 50% tariffs imposed on US imports from Brazil, thereby tightening US supplies, as about a third of America's unroasted coffee comes from Brazil.

Last Friday, coffee prices rallied to 3-week highs on concerns about dry weather in Brazil during the critical flowering phase of the 2026/27 coffee crop.  Somar Meteorologia reported Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received 0.9 mm of rain during the week ended October 4, or 3% of the historical average.  

Coffee prices also garnered support after the National Oceanic and Atmospheric Administration (NOAA) on September 16  increased the likelihood of a La Niña weather system in the southern hemisphere from October to December to 71%, which could bring excessive dry weather to Brazil and harm the 2026/27 coffee crop.  Brazil is the world's largest producer of arabica coffee.

As a bearish factor, the International Coffee Organization (ICO) reported on Monday that global coffee exports for the current marketing year (Oct-Aug) rose +0.2% y/y to 127.92 million bags, indicating adequate exports and supplies.

Robusta coffee is under pressure due to an increase in coffee supplies from Vietnam.  The Vietnam National Statistics Office reported Monday that Vietnam's Jan-Sep 2025 coffee exports were up +10.9% y/y to 1.230 MMT.

Coffee prices found support after Conab, Brazil's crop forecasting agency, cut its Brazil 2025 arabica coffee crop estimate on September 4 by -4.9% to 35.2 million bags from a May forecast of 37.0 million bags.  Conab also reduced its total Brazil 2025 coffee production estimate by 0.9% to 55.2 million bags, from a May estimate of 55.7 million bags.

Reduced exports from Brazil are supporting prices.  On August 12, Brazil's exporter group Cecafe reported that Brazil's July coffee exports fell -28% to 2.7 million bags, and that coffee shipments during Jan-July fell -21% to 22.2 million bags.

A bumper robusta coffee crop in Vietnam is bearish for prices.  Vietnam's 2025/26 coffee production is expected to climb +6% y/y to 1.76 MMT, or 29.4 million bags, a 4-year high.  Vietnam is the world's largest producer of robusta coffee.

The USDA's Foreign Agriculture Service (FAS) projected on June 25 that world coffee production in 2025/26 will increase by +2.5% y/y to a record 178.68 million bags, with a -1.7% decrease in arabica production to 97.022 million bags and a +7.9% increase in robusta production to 81.658 million bags.  FAS forecasted that Brazil's 2025/26 coffee production will increase by +0.5% y/y to 65 million bags and that Vietnam's 2025/26 coffee output will rise by 6.9% y/y to a 4-year high of 31 million bags.  FAS forecasts that 2025/26 ending stocks will climb by +4.9% to 22.819 million bags from 21.752 million bags in 2024/25.  However, Volcafe is projecting a global 2025/26 arabica coffee deficit of -8.5 million bags, wider than the -5.5 million bag deficit for 2024/25 and the fifth consecutive year of deficits.