May arabica coffee (KCK26) on Wednesday closed up +13.40 (+4.64%), and May ICE robusta coffee (RMK26) closed up +82 (+2.37%).

Coffee prices rallied sharply on Wednesday, hitting 3.5-week highs.   Concerns that a prolonged US-Iran war will keep the Strait of Hormuz closed and disrupt global coffee supplies sparked short covering in coffee futures on Wednesday.  The closure of the strait has tightened coffee supplies by increasing global shipping rates, insurance, fertilizer, and fuel costs, and raising costs for coffee importers and roasters.  

Signs of tighter robusta coffee supplies are bullish for robusta coffee prices after ICE robusta inventories fell to a 16-month low of 3,755 lots on Tuesday.

On Tuesday, arabica coffee fell to a 7-week low amid expectations of a record Brazilian coffee crop.  On March 19, Marex Group Plc projected a record 2026/27 Brazilian coffee crop of 75.9 million bags, surpassing Sucafina's forecast of 75.4 million bags (+15.5% y/y).  On March 12, StoneX 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.  Meanwhile, StoneX projected the 2026 global coffee surplus will expand to 10 million bags from 1.8 million bags in 2025, the biggest surplus in 6 years.

Soaring coffee exports from Vietnam, the world's largest robusta producer, are bearish for robusta prices.  On April 3, Vietnam's National Statistics Office reported that Vietnam's 2026 coffee exports (Jan-Mar) rose by +14% y/y to 585,000 MT.  Vietnam's 2025 coffee exports jumped by +17.5% y/y to 1.58 MMT.  Also, Vietnam's 2025/26 coffee production is projected to climb +6% y/y to a 4-year high of 1.76 MMT (29.4 million bags).

Smaller exports from Brazil are supportive of coffee prices.  Last Tuesday, Cecafe reported that Brazil Mar green coffee exports fell -10% y/y to 2.65 million bags.  On April 7, Brazil's Trade Ministry reported that Brazil's Mar coffee exports fell -31% y/y to 151,000 MT.  

Below-average rainfall in Brazil may curb coffee yields and is bullish for prices after Somar Meteorologia reported last Monday that Brazil's largest arabica coffee-growing area, Minas Gerais, received 4.2 mm of rain last week, or only 20% of the historical average.

As a bearish factor, the International Coffee Organization (ICO) reported on November 7 that global coffee exports for the current marketing year (Oct-Sep) fell -0.3% y/y to 138.658 million bags.

The USDA's Foreign Agriculture Service (FAS) bi-annual report on December 18 projected that world coffee production in 2025/26 will increase by +2.0% y/y to a record 178.848 million bags, with a -4.7% decrease in arabica production to 95.515 million bags and a +10.9% increase in robusta production to 83.333 million bags.  FAS forecasted that Brazil's 2025/26 coffee production will decline by -3.1% y/y to 63 million bags and that Vietnam's 2025/26 coffee output will rise by 6.2% y/y to a 4-year high of 30.8 million bags.  FAS forecasts that 2025/26 ending stocks will fall by -5.4% to 20.148 million bags from 21.307 million bags in 2024/25.