May arabica coffee (KCK26) on Thursday closed up by +4.50 (+1.57%), and May ICE robusta coffee (RMK26) closed up by +72 (+2.03%).
Coffee prices finished sharply higher on Thursday due to the Iran war, which has closed the Strait of Hormuz and disrupted global shipping. Iran’s Supreme Leader Ayatollah Mojtaba Khamenei said today that Iran’s leverage of closing the Strait of Hormuz should be used, and UK Defense Secretary Healey said it is increasingly evident that Iran is laying mines in the Strait of Hormuz. The closure of the waterway has increased global shipping rates, insurance, and fuel costs, and raises costs for coffee importers and roasters.
Gains in coffee prices were limited on Thursday amid favorable weather in Brazil, as showers are forecast in key coffee-growing areas. Also, StoneX on Thursday 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.
In supportive news, Somar Meteorologia reported on Monday that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 14.9 mm of rain last week, or 35% of the historical average.
Coffee prices also saw support from last Tuesday’s news that Brazil’s green coffee exports in February fell by -27% y/y, 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.
Rising ICE inventories also pressure coffee prices. ICE-monitored arabica inventories rose to a 5-month high of 564,626 bags on Tuesday but fell back slightly to 552,192 bags on Wednesday. ICE robusta coffee inventories posted a 3.5-month high of 4,721 lots on March 3 but have since fallen back to 4,550 lots as of today.
Coffee prices in February sold off sharply, with arabica falling to a 15-month low on February 24 and robusta tumbling to a 6.75-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.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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