Coffee prices surged on Thursday, with July arabica coffee rising 3.87% and May robusta coffee climbing 4.32%, reaching four-week highs. The rally is driven by fears that ongoing tensions in the US-Iran conflict could disrupt shipping routes through the Strait of Hormuz, leading to increased costs for coffee importers and roasters due to higher shipping rates and insurance. Additionally, a stronger Brazilian real is discouraging coffee exports, further tightening supplies.
This price surge comes amidst mixed projections for coffee production. While Brazil is expected to produce a record crop of 75.9 million bags in the 2026/27 season, reports indicate a significant decline in exports, with March shipments falling 31% year-over-year. Conversely, Vietnam’s robusta coffee exports are on the rise, which could exert downward pressure on robusta prices.
Market professionals should note that the combination of geopolitical tensions, currency fluctuations, and varying production forecasts could lead to increased volatility in coffee prices, warranting close monitoring of these developments.
Source: nasdaq.com