Dubai – Qahwa World

Coffee futures traded sharply higher today. Arabica coffee rose to its highest level in one week. July arabica gained 3.43 percent. July robusta added 1.5 percent.

A major supporting factor is the strength of the Brazilian real. The currency surged to a two and a quarter year high against the US dollar. A stronger real discourages Brazilian coffee farmers from selling their crops overseas, which pushes prices upward.

Additional support comes from the ongoing closure of the Strait of Hormuz. This disruption has raised global shipping rates, insurance costs, fertilizer and fuel expenses. Coffee importers and roasters now face higher costs, tightening global supplies.

On the negative side, expectations of a large Brazilian coffee crop are limiting gains. The Coffee Trading Academy projected last Thursday that Brazil’s 2026/2027 harvest will increase 12 percent year over year to 71.4 million bags.

On March 19, Marex Group Plc forecast a record Brazilian crop of 75.9 million bags for the same season. That surpassed Sucafina’s forecast of 75.4 million bags, which represented a 15.5 percent annual increase. On March 12, StoneX raised its Brazil production estimate to a record 75.3 million bags, up from a November estimate of 70.7 million bags. StoneX also projected the 2026 global coffee surplus would expand to 10 million bags from 1.8 million bags in 2025. That would be the largest surplus in six years.

For robusta coffee, soaring exports from Vietnam are a bearish factor. Vietnam is the world’s largest robusta producer. On Saturday, Vietnam’s National Statistics Office reported that the country’s coffee exports from January to April 2026 rose 15.8 percent year over year to 810,000 metric tons. Vietnam’s 2025 coffee exports jumped 17.5 percent annually to 1.58 million metric tons. In addition, Vietnam’s 2025/2026 coffee production is projected to climb 6 percent year over year to a four year high of 1.76 million metric tons, or 29.4 million bags.

Tightness in arabica supplies is supporting prices. ICE arabica coffee inventories fell to a two and a quarter month low of 494,508 bags on April 21.

Smaller exports from Brazil also help support prices. On April 14, Cecafe reported that Brazil’s March green coffee exports fell 10 percent year over year to 2.65 million bags. On April 7, Brazil’s Trade Ministry reported that March coffee exports fell 31 percent annually to 151,000 metric tons.

Robusta coffee also sees bullish signs from tighter supplies. ICE robusta inventories fell to a sixteen and a quarter month low of 3,755 lots last Tuesday.

As a bearish factor, the International Coffee Organization reported on November 7 that global coffee exports for the current marketing year, which runs October through September, fell 0.3 percent year over year to 138.658 million bags.

The USDA’s Foreign Agriculture Service said in its biannual report on December 18 that world coffee production in 2025/2026 would increase 2.0 percent annually to a record 178.848 million bags. That includes a 4.7 percent decrease in arabica production to 95.515 million bags and a 10.9 percent increase in robusta production to 83.333 million bags. The USDA forecasted that Brazil’s 2025/2026 coffee production would decline 3.1 percent to 63 million bags. Vietnam’s coffee output would rise 6.2 percent to a four year high of 30.8 million bags. The USDA also forecasts that 2025/2026 ending stocks will fall 5.4 percent to 20.148 million bags from 21.307 million bags in 2024/2025.