Supply Concerns Boost Coffee Prices

May arabica coffee (KCK26) on Friday closed up +8.85 (+2.94%), and May ICE robusta coffee (RMK26) closed down -5 (-0.14%).

Coffee prices on Friday extended this week’s rally, with arabica posting a 1.5-month high and robusta a 1.5-week high.  The closure of the Strait of Hormuz has disrupted global shipping, tightened global supplies, and is supporting coffee prices.  The closure of the waterway has increased global shipping rates, insurance, and fuel costs, and raises costs for coffee importers and roasters.  Coffee prices fell back from their best levels on Friday, with robusta falling into negative territory, due to a stronger dollar.

Robusta coffee also has support from tighter inventories, as ICE robusta inventories fell to a 2-month low of 4,257 lots on Friday.

On Monday, arabica coffee fell to a 2-week low, and May robusta fell to a contract low, as abundant rains in Brazil eased crop concerns.  Somar Meteorologia reported Monday that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 57.7 mm of rain last week, or 139% of the historical average.

The outlook for a bumper Brazil coffee crop is bearish for coffee prices, after StoneX raised its Brazil 2026/27 coffee production estimate to a record 75.3 million bags, up from its November estimate of 70.7 million bags.  Rising ICE inventories are also pressuring arabica coffee prices as ICE-monitored arabica inventories rose to a 5.75-month high of 585,621 bags on Wednesday.

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 reported last Thursday that Brazil’s Feb coffee exports fell -17.4% y/y to 142,000 MT.

Coffee prices in February sold off sharply, with arabica falling to a 16-month low on February 24 and robusta tumbling to a 7.25-month low on February 23 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.  

Soaring coffee exports from Vietnam, the world’s largest robusta producer, are bearish for robusta prices.  Vietnam’s National Statistics Office reported on March 6 that its Jan-Feb 2026 coffee exports rose by 14% y/y to 366,000 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).

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.

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