On Thursday, July arabica coffee (KCN26) closed up +11.20 (+3.87%), while May ICE robusta coffee (RMK26) rose by +153 (+4.32%), reaching 4-week highs. The rally is driven by concerns over a potential US-Iran conflict that could disrupt global coffee supplies through the Strait of Hormuz, increasing shipping costs and impacting coffee importers and roasters.
The Brazilian real strengthened against the dollar, reaching a 2-year high, further affecting export sales from Brazil’s coffee producers. Meanwhile, ICE robusta inventories dropped to a 16-month low of 3,755 lots, heightening bullish sentiment for robusta prices. In contrast, Vietnam’s coffee exports grew by +14% year-over-year for the first quarter of 2026, leading to bearish conditions for robusta prices.
In Brazil, March coffee exports fell -10% year-over-year to 2.65 million bags, and below-average rainfall in major coffee-growing areas may further curb yields. The USDA projects world coffee production for 2025/26 will increase by +2% to a record 178.848 million bags, while Brazil’s production is expected to decline by -3.1% to 63 million bags.
