Coffee prices took a hit on Thursday, with May arabica futures down 2.56% and May robusta futures falling 1.53%. The decline was primarily driven by a stronger dollar, which sparked long liquidation in coffee futures. While robusta prices were somewhat cushioned by tight supplies—ICE robusta inventories have dipped to a 1.25-year low—arabica faced additional pressure from expectations of a record Brazilian coffee crop.
The market is reacting to forecasts indicating Brazil’s coffee production could reach unprecedented levels, with estimates for the 2026/27 crop as high as 75.9 million bags. This anticipated surplus, combined with rising ICE arabica inventories at a 6.5-month high, is contributing to bearish sentiment in the coffee sector. Furthermore, disruptions in global shipping due to the closure of the Strait of Hormuz are raising costs for coffee importers, adding another layer of complexity to the market dynamics.
For market professionals, the key takeaway is the potential for continued volatility in coffee prices as supply forecasts evolve. Traders should closely monitor Brazilian production reports and global shipping developments, as these factors will significantly influence price trends in the coming months.
Source: nasdaq.com