Dubai – Qahwa World

Coffee prices climbed back from one-and-a-half-week lows on Friday, ending the session in positive territory. The turnaround came as the U.S. dollar dropped to a two-week low, prompting traders to cover short positions in the coffee market. This price recovery was also influenced by coffee futures short covering as traders adjusted their positions. Notably, coffee futures short covering has played a key role in recent market movements.

July arabica coffee rose 0.85 cents (0.30%), while July robusta coffee gained 3 points (0.09%).

Early Losses on Brazil Crop Outlook

Prices initially moved lower on expectations of a larger harvest in Brazil. The Coffee Trading Academy projected Thursday that Brazil’s 2026/27 coffee crop would rise 12% year-over-year to 71.4 million bags.

Just days earlier, arabica had touched a 1.75-month low following forecasts of a record Brazilian harvest. On March 19, Marex Group predicted a record 75.9 million bags for 2026/27, beating Sucafina’s estimate of 75.4 million bags (up 15.5% annually). StoneX also raised its production outlook for Brazil to an all-time high of 75.3 million bags on March 12, up from a prior forecast of 70.7 million bags. Additionally, StoneX expects the global coffee surplus to balloon from 1.8 million bags in 2025 to 10 million bags in 2026 — the widest surplus in six years. As a result, coffee futures short covering activity may increase amid these predictions.

Vietnamese Exports Weigh on Robusta

Soaring shipments from Vietnam, the world’s top robusta producer, are putting pressure on robusta prices. Vietnam’s National Statistics Office reported on April 3 that first-quarter 2026 coffee exports rose 14% year-over-year to 585,000 metric tons. For all of 2025, exports jumped 17.5% to 1.58 million metric tons. Moreover, Vietnam’s 2025/26 production is expected to climb 6% to a four-year high of 1.76 million metric tons (29.4 million bags).

Supply Tightness Offers Support

On the bullish side, arabica supplies are showing signs of tightness. ICE arabica coffee inventories fell to a two-month low of 494,508 bags on Tuesday, contributing to coffee futures short covering by traders seeking to limit risk.

Similarly, robusta supplies are tightening — ICE robusta stocks dropped to a 16-month low of 3,755 lots last Tuesday.

Geopolitical and Export Factors

Ongoing concerns over a prolonged U.S.-Iran conflict and potential closure of the Strait of Hormuz are also supporting prices. Such disruptions have raised shipping rates, insurance premiums, and costs for fertilizers, fuel, importers, and roasters. Therefore, it is evident that coffee futures short covering remains a significant factor in this volatile environment.

Brazilian export data further supports prices. Cecafe reported on April 14 that Brazil’s March green coffee exports fell 10% year-over-year to 2.65 million bags. Brazil’s Trade Ministry also noted on April 7 that March coffee exports dropped 31% from a year ago to 151,000 metric tons.

Bearish Reports and Forecasts

On the downside, the International Coffee Organization (ICO) said on November 7 that global coffee exports for the current marketing year (October–September) edged down 0.3% year-over-year to 138.658 million bags.

The USDA’s Foreign Agriculture Service (FAS) projected in its December 18 biannual report that world coffee production for 2025/26 would rise 2% to a record 178.848 million bags. That includes a 4.7% drop in arabica output (to 95.515 million bags) and a 10.9% increase in robusta production (to 83.333 million bags). The FAS also forecast Brazil’s 2025/26 crop falling 3.1% to 63 million bags, while Vietnam’s output rises 6.2% to a four-year high of 30.8 million bags. Ending stocks for 2025/26 are expected to decline 5.4% to 20.148 million bags, down from 21.307 million bags in 2024/25.