Coffee prices surged today, with May arabica coffee (KCK26) rising 4.33% and robusta coffee (RMK26) climbing 2.89%. The increase is largely driven by fears that ongoing tensions in the US-Iran conflict could disrupt shipping through the Strait of Hormuz, leading to higher global shipping and insurance costs. This situation is exacerbated by dwindling robusta inventories, which recently fell to a 16-month low, and a reported 10% year-over-year drop in Brazil’s green coffee exports.
The tightening of coffee supplies, coupled with adverse weather conditions in Brazil contributing to lower yields, has created a bullish environment for coffee prices. While forecasts suggest a record Brazilian coffee crop for the 2026/27 season, the immediate supply constraints and rising costs for importers and roasters are likely to keep prices elevated in the short term.
Market participants should closely monitor geopolitical developments and weather patterns in Brazil, as these factors will significantly influence coffee supply dynamics and price trends moving forward.
Source: nasdaq.com