Coffee Rally Triggered by Vietnam Floods and US Tariff Chaos

Coffee futures are heating up today. Robusta jumped +2.37% to a 2-week high, while arabica gained +0.57%, as two major supply shocks collide in the market.

What’s driving it?

Vietnam’s Dak Lak province—accounting for over half of the world’s robusta output—is getting hammered by heavy rains that are delaying harvests and threatening crop damage. This pushed robusta futures into overdrive.

Meanwhile, the Trump administration’s tariff situation on Brazilian coffee keeps getting messier. While reciprocal tariffs on non-US-grown commodities were dropped, Brazil’s coffee still faces a separate 40% “national emergency” tariff, leaving US importers scrambling. The result? US purchases of Brazilian coffee plummeted 52% between Aug-Oct compared to last year—down to just 983,970 bags.

The supply squeeze is real:

ICE arabica inventories hit a 1.75-year low at 396,513 bags. Robusta inventories fell to a 4-month low of 5,640 lots. Global coffee exports actually declined 0.3% YoY despite expected production growth, signaling tighter physical supplies.

What’s pushing back?

Brazil’s producing more coffee—Conab projects 55.2M bags in 2025, while Vietnam’s 2025/26 output is expected to hit 1.76M tons (+6% YoY). That’s actual new supply coming online.

The game here: tariffs are choking distribution channels while weather wildcards could disrupt harvests. Watch the dollar—weaker USD typically boosts commodity prices, which already provided some tailwind today.