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Coffee futures are pumping today, with Arabica rising by 3.26% and Robusta rising by 3.19%. Main drivers: drought in Brazil + typhoon threat in Vietnam.
Core Data:
- Last week, the rainfall in Brazil's largest production area Minas Gerais was only 33.4mm, which is only 75% of the historical average.
- Vietnam's coffee exports from January to September increased by 10.9% year-on-year to 1.23 million tons.
- ICE Arabica inventories fell to a 19.5-month low of 431,728 bags
- Global coffee production is expected to reach a record 176.8 million bags in the 25/26 year.
Stalemate corner: The U.S. imposing a 50% tariff on Brazilian coffee has led to a decrease in inventory, but the market is betting that Trump may soon cancel this tariff. On the other hand, Vietnam's production for 2025/26 could reach 4.4 million tons (up 6% year-on-year), and if the weather is favorable, it may be 10% higher.
Risk: There is a 71% probability that the La Niña climate system will form, which may continue to severely impact the drought situation in Brazil next year.