July arabica coffee (KCN26) on Monday closed down -0.90 (-0.31%), and July ICE robusta coffee (RMN26) did not trade as UK markets were closed for the May Day holiday.

Arabica coffee gave up an early advance on Monday and settled lower, weighed down by a stronger dollar.  Prices initially moved higher on Monday, supported by concerns about the escalation of the US-Iran war, which could keep the Strait of Hormuz closed and disrupt global coffee supplies.   The closure of the strait has tightened coffee supplies by increasing global shipping rates, insurance, fertilizer, and fuel costs, and raising costs for coffee importers and roasters.  

Expectations of a larger Brazilian coffee crop are negative for prices.  Last Thursday, the Coffee Trading Academy projected Brazil's 2026/27 coffee harvest will increase by 12% y/y to 71.4 million bags.  On March 19, Marex Group Plc projected a record 2026/27 Brazilian coffee crop of 75.9 million bags, surpassing Sucafina's forecast of 75.4 million bags (+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 bearish for robusta prices.  On Saturday, Vietnam's National Statistics Office reported that Vietnam's 2026 coffee exports (Jan-Apr) rose by +15.8% y/y to 810,000 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).

Signs of tightness in current arabica supplies are supportive of prices, after ICE arabica coffee inventories fell to a 2.25-month low of 494,508 bags on April 21.

Smaller exports from Brazil are supportive of coffee prices.  On April 14, Cecafe reported that Brazil Mar green coffee exports fell -10% y/y to 2.65 million bags.  On April 7, Brazil's Trade Ministry reported that Brazil's Mar coffee exports fell -31% y/y to 151,000 MT.  

Signs of tighter robusta coffee supplies are bullish for robusta coffee prices after ICE robusta inventories fell to a 16.25-month low of 3,755 lots last Tuesday.

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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