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May arabica coffee (KCK26) on Friday closed up +6.40 (+2.18%), and May ICE robusta coffee (RMK26) closed up +14 (+0.42%).
Coffee prices settled higher on Friday, with arabica posting a 1-week high and robusta rebounding from an 8.5-month nearest-futures low. Strength in the Brazilian real boosted coffee prices as the real (^USDBRL) jumped to a 2-year high against the dollar on Friday. The stronger real discourages export sales from Brazil’s coffee producers.
Tightness in robusta coffee supplies is supportive for robusta prices. ICE robusta inventories fell to a 1.25-year low of 3,977 lots on Friday. However, rising ICE inventories are also pressuring arabica coffee prices as ICE-monitored arabica inventories rose to a 6.25-month high of 585,621 bags on March 18.
The closure of the Strait of Hormuz has disrupted global shipping and tightened global coffee supplies. The closure of the waterway has increased global shipping rates, insurance, and fuel costs, and raises costs for coffee importers and roasters.
Below-normal rainfall in Brazil is supportive of coffee prices. Somar Meteorologia reported last Monday that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 11.7 mm of rain last week, or only 47% of the historical average.
On Wednesday, arabica fell to a 3-week low amid expectations of a record Brazilian coffee crop. On March 19, Marex Group Plc projected a record 2026/27 Brazil coffee crop of 75.9 million bags, even higher than Sucafina’s forecast of 75.4 million bags, up +15.5% y/y. On March 12, StoneX raised its Brazil 2026/27 coffee production estimate to a record 75.3 million bags, up from a November estimate of 70.7 million bags. Meanwhile, StoneX projected the 2026 global coffee surplus will expand to 10 million bags from 1.8 million bags in 2025, the biggest surplus in 6 years.
Soaring coffee exports from Vietnam, the world’s largest robusta producer, are weighing on robusta prices. Last Friday, Vietnam’s National Statistics Office reported that Vietnam’s 2026 coffee exports (Jan-Mar) rose by 14% y/y to 585,000 MT. Vietnam’s 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT. Also, Vietnam’s 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).
Coffee prices also saw support from recent news that Brazil’s Feb green coffee exports fell by -27% y/y to 2.3 million bags, according to Cecafe. Meanwhile, Brazil’s Trade Ministry on Wednesday reported that Brazil’s Mar coffee exports fell -31% y/y to 151,000 MT.
Coffee prices in February sold off sharply, with arabica falling to a 16.75-month low on February 24 as signs of a bumper Brazilian coffee crop supported the global supply outlook. On February 5, Conab, Brazil’s crop forecasting agency, said that Brazil’s 2026 coffee production will climb by +17.2% y/y to a record 66.2 million bags, with arabica production up +23.2% y/y to 44.1 million bags and robusta production up +6.3% y/y to 22.1 million bags. Meanwhile, Rabobank said on March 4 that global coffee production is projected to reach a record 180 million bags in the 2026/27 season, up by about 8 million bags from a year earlier.
As a bearish factor, the International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% y/y to 138.658 million bags.
The USDA’s Foreign Agriculture Service (FAS) bi-annual report on December 18 projected that world coffee production in 2025/26 will increase by +2.0% y/y to a record 178.848 million bags, with a -4.7% decrease in arabica production to 95.515 million bags and a +10.9% increase in robusta production to 83.333 million bags. FAS forecasted that Brazil’s 2025/26 coffee production will decline by -3.1% y/y to 63 million bags and that Vietnam’s 2025/26 coffee output will rise by 6.2% y/y to a 4-year high of 30.8 million bags. FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
