Coffee futures experienced an upward trajectory on Friday, with May arabica coffee (KCK26) closing up +6.40 (+2.18%) and May ICE robusta coffee (RMK26) rising +14 (+0.42%). This rally saw arabica reach a one-week high, while robusta rebounded from an 8.5-month nearest-futures low. A primary catalyst for this price appreciation was the significant strengthening of the Brazilian real, which jumped to a two-year high against the dollar, directly impacting the economics of coffee exports from the world’s largest producer.
Real’s Influence on Export Dynamics
The appreciation of the Brazilian real (^USDBRL) makes Brazilian coffee more expensive for international buyers, thereby discouraging export sales from the nation’s producers. This currency strength effectively tightens global supply by reducing the competitiveness of Brazilian beans in the international market, leading to upward pressure on prices. Recent data underscores this trend, with Brazil’s green coffee exports in February falling by -27% year-over-year to 2.3 million bags, according to Cecafe. Similarly, Brazil’s Trade Ministry reported a -31% year-over-year decline in March coffee exports to 151,000 metric tons, further illustrating the impact of various factors, including potentially the stronger real, on export volumes.
Broader Supply Constraints Bolster Prices
Beyond currency dynamics, several other factors contributed to the supportive environment for coffee prices. Tightness in robusta coffee supplies, in particular, provided a boost, with ICE robusta inventories declining to a 1.25-year low of 3,977 lots on Friday. Global shipping disruptions, notably the closure of the Strait of Hormuz, have also played a role. This waterway closure has escalated global shipping rates, insurance costs, and fuel expenses, consequently raising costs for coffee importers and roasters and contributing to tighter global coffee supplies.
Weather conditions in Brazil have also offered support. Somar Meteorologia reported that Minas Gerais, Brazil’s largest arabica coffee-growing region, received only 11.7 mm of rain last week, representing just 47% of the historical average. Such below-normal rainfall can impact crop development and yield expectations, further underpinning price strength.
Headwinds from Anticipated Bumper Crops and Surpluses
Despite the recent gains, the coffee market faces significant countervailing pressures from expectations of record-breaking crops and expanding global surpluses. On Wednesday, arabica prices briefly fell to a three-week low amid these projections. Marex Group Plc, for instance, projected a record 2026/27 Brazil coffee crop of 75.9 million bags, a substantial increase of +15.5% year-over-year, surpassing Sucafina’s forecast of 75.4 million bags. StoneX also raised its Brazil 2026/27 coffee production estimate to a record 75.3 million bags, up from a November estimate of 70.7 million bags.
Further dampening the long-term outlook, StoneX projected the 2026 global coffee surplus to expand significantly to 10 million bags from 1.8 million bags in 2025, marking the biggest surplus in six years. Conab, Brazil’s crop forecasting agency, had earlier stated on February 5 that Brazil’s 2026 coffee production would climb by +17.2% year-over-year to a record 66.2 million bags, with arabica production up +23.2% and robusta production up +6.3%. Rabobank, on March 4, projected global coffee production to reach a record 180 million bags in the 2026/27 season, an increase of approximately 8 million bags from the previous year.
Adding to the bearish sentiment, ICE-monitored arabica inventories have been on the rise, reaching a 6.25-month high of 585,621 bags on March 18. Soaring coffee exports from Vietnam, the world’s largest robusta producer, are also weighing on robusta prices. Vietnam’s National Statistics Office reported that the country’s 2026 coffee exports (January-March) rose by 14% year-over-year to 585,000 metric tons, following a +17.5% year-over-year jump in 2025 exports to 1.58 million metric tons. Vietnam’s 2025/26 coffee production is projected to climb +6% year-over-year to a four-year high of 1.76 million metric tons (29.4 million bags).
The International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (October-September) fell -0.3% year-over-year to 138.658 million bags. The USDA’s Foreign Agriculture Service (FAS) bi-annual report on December 18 projected world coffee production in 2025/26 to increase by +2.0% year-over-year to a record 178.848 million bags, with robusta production seeing a +10.9% increase. While FAS forecasted Brazil’s 2025/26 coffee production to decline by -3.1% year-over-year to 63 million bags, it also projected Vietnam’s 2025/26 coffee output to rise by 6.2% year-over-year to a four-year high of 30.8 million bags. Despite these varied forecasts, FAS anticipates 2025/26 ending stocks to fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.
The coffee market currently navigates a complex interplay of forces. While the immediate strength of the Brazilian real and specific supply constraints provided a notable boost to futures prices on Friday, the broader outlook remains tempered by robust production forecasts from key growing regions and the specter of an expanding global surplus. This dynamic suggests that while currency movements can offer short-term price support, the fundamental supply-demand balance will continue to exert significant influence on coffee’s trajectory.
