Brazil Rain Forecast Triggers Coffee Market Selloff—Here's What You Need to Know

Coffee futures took a beating on Wednesday as traders rushed for the exits. March arabica dropped 3.31% while January robusta fell 1.25%, both pressured by one thing: rain coming to Brazil.

Weather forecaster Climatempo is calling for heavy showers hitting Brazil’s coffee belt by late week, and that’s exactly what the market didn’t want to see. More rain = healthier crops = lower prices. It’s that simple.

The Tariff Wildcard

But here’s where it gets interesting. Coffee had actually been rallying over the past two days because of Trump’s tariffs on Brazilian imports. That 40% “national emergency” levy is still in play, even though the admin dropped reciprocal tariffs last week. US importers are sweating over whether they’re exempt—nobody knows yet.

The result? Massive supply squeeze. ICE arabica inventories just hit a 1.75-year low of 396,513 bags, while robusta hit a 4-month low. US coffee purchases from Brazil crashed 52% year-over-year (Aug-Oct data), falling to just 983,970 bags as buyers dodged the tariff bullet.

Supply vs. Demand Reality Check

Here’s the tension:

Bullish signals:

• Global exports down 0.3% y/y (Oct-Sep marketing year)
• Brazil’s 2025 arabica crop cut by 4.9% to 35.2M bags (Conab data)
• Tighter US warehouses = support for prices

Bearish headwinds:

• Brazil’s 2026/27 crop could surge +29% y/y to 70.7M bags (StoneX forecast)
• Vietnam robusta output rising +6% to 1.76 MMT—a 4-year high
• Vietnam exports already up 13.4% y/y through October

Bottom line: Short-term supply crunch meets long-term global abundance. Wednesday’s rain forecast just shifted the narrative back to fundamentals. Watch Brazil’s weather this week—it could define the next leg of coffee prices.