Coffee futures saw a modest recovery on Friday, with July arabica coffee rising 0.30% and robusta coffee up 0.09%. This rebound followed a decline in the dollar index, which encouraged short covering. Despite initial downward pressure from expectations of a larger Brazilian coffee crop—projected to increase by 12% year-on-year to 71.4 million bags—tightening supplies and geopolitical concerns have provided support for prices.
The market is reacting to a projected global coffee surplus of 10 million bags for the 2026 season, the largest in six years, alongside rising exports from Vietnam. However, tight arabica inventories, which recently fell to a two-month low, and reduced exports from Brazil are contributing to price support. Additionally, concerns over potential disruptions in the Strait of Hormuz due to ongoing geopolitical tensions are raising costs for importers and roasters, further influencing market dynamics.
Traders should monitor the evolving supply landscape, particularly the implications of Brazil’s production forecasts and the impact of geopolitical events on shipping costs, as these factors will significantly shape coffee price trends in the near term.
Source: nasdaq.com