May arabica coffee (KCK26) on Monday closed up +3.85 (+1.37%), and May ICE robusta coffee (RMK26) closed up +148 (+4.08%).
Coffee prices settled sharply higher on Monday, with robusta posting a 2-week high. Supply concerns are supporting coffee prices, as the war in Iran has halted most shipping traffic through the Strait of Hormuz, boosting global shipping rates, insurance, and fuel costs, which will raise costs for coffee importers and roasters.
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Gains in arabica coffee were limited on Monday as beneficial rains in Brazil have improved the outlook for the country’s coffee crop. Somar Meteorologia reported Monday that Brazil’s largest arabica coffee-growing area, Minas Gerais, received 78 mm of rain during the week ended February 20, or 131% of the historical average.
Coffee prices have sold off sharply over the past five weeks, with arabica falling to a 15-month low last Tuesday and robusta tumbling to a 6.75-month low last Monday as signs of a bumper Brazilian coffee crop have improved 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, last Wednesday, Rabobank said 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. On February 6, Vietnam’s National Statistics Office reported that Vietnam’s Jan coffee exports surged +38.3% y/y to 198,000 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).
The recovery in ICE coffee inventories is negative for prices. ICE-monitored arabica inventories fell to a 1.75-year low of 396,513 bags on November 18, but recovered to a 4.75-month high of 510,151 bags on Monday. Also, ICE robusta coffee inventories fell to a 14-month low of 4,012 lots on December 10 but recovered to a 2.75-month high of 4,662 lots on January 26.
On the positive side for coffee, Brazil’s Trade Ministry reported on February 5 that Brazil’s Jan coffee exports fell -42.4% y/y to 141,000 MT.
Smaller coffee supplies from Colombia, the world’s second-largest arabica producer, are supportive of prices, following the National Federation of Coffee Growers’ report that January coffee production fell by -34% y/y to 893,000 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.
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