Dubai – Qahwa World
Coffee futures rose sharply on Wednesday, hitting a 3.5-week high as markets reacted to escalating disruptions linked to the Iran war and concerns over global supply chains.
The main driver of the rally was growing uncertainty around the Strait of Hormuz, a critical global shipping route. Traders fear that prolonged conflict could keep the passage restricted, pushing up shipping costs, insurance premiums, fuel expenses, and overall logistics costs for coffee exporters and importers.
At the same time, tightness in robusta supply added upward pressure on prices, with ICE inventories recently falling to their lowest level in more than a year.
However, the broader market picture remains mixed. Arabica coffee had recently slipped to a seven-week low due to expectations of a very large Brazilian crop, with multiple forecasts pointing to a record harvest in the 2026/27 season. Larger projected global surpluses in the coming year are also seen as a long-term limiting factor for prices.
On the supply side, Vietnam continues to support global availability through strong export volumes, reflecting higher production levels in the world’s largest robusta-producing country. Meanwhile, Brazil’s export figures have shown recent declines compared with last year, and uneven rainfall in key growing regions is raising some concern about yield stability.
Longer-term projections from agricultural agencies still point to rising global production, particularly in robusta coffee, while arabica output is expected to decline. Even so, global ending stocks are forecast to tighten slightly in future seasons.
Overall, coffee markets are being pulled between short-term geopolitical disruption linked to the Iran war and longer-term expectations of strong global supply growth.
