Arabica coffee prices fell 0.31% on Monday, closing at $0.90 per pound, as a stronger dollar overshadowed initial gains driven by geopolitical tensions in the Middle East. Concerns over potential disruptions in the Strait of Hormuz, a critical shipping route, have heightened worries about global coffee supply and increased costs for importers. However, expectations of a significant increase in Brazil’s coffee crop, projected to rise by 12% year-on-year to 71.4 million bags, are exerting downward pressure on prices.
The market is also reacting to robusta coffee dynamics, with Vietnam reporting a 15.8% year-on-year increase in coffee exports for early 2026, further contributing to bearish sentiment. Additionally, ICE inventories for arabica have recently dipped to a 2.25-month low, suggesting potential support for prices amidst tightening supplies.
For market professionals, the key takeaway is the contrasting supply outlooks: while geopolitical concerns and current inventory levels may provide short-term support, the anticipated surge in Brazilian coffee production could lead to longer-term price declines.
Source: nasdaq.com