Coffee futures prices declined on Tuesday, with arabica and robusta contracts closing lower after an early advance. The drop was driven by a weakening Brazilian real, which encouraged exports from the world's top producer. Initial gains stemmed from supply disruptions in the Middle East, but beneficial rains in Brazil tempered the outlook.
On Tuesday, May arabica coffee futures (KCK26) closed down 1.45 cents, or 0.51%, while May ICE robusta coffee (RMK26) fell 67 points, or 1.78%. Prices had initially risen due to supply concerns from the war in Iran, which halted shipping through the Strait of Hormuz. This disruption increased global shipping rates, insurance premiums, and fuel costs, raising expenses for coffee importers and roasters.
However, the market reversed as the Brazilian real (^USDBRL) weakened to a 1.5-month low against the U.S. dollar, prompting long liquidation in futures. The softer currency makes Brazilian coffee more competitive internationally, boosting export sales from producers in the country, the largest global supplier.
Adding downward pressure, beneficial rains in Brazil improved prospects for the coffee crop. Somar Meteorologia noted on Monday that precipitation in Minas Gerais, Brazil's primary arabica-growing region, enhanced yield outlooks, acting as a bearish factor for prices. Arabica retreated from a one-week high, and robusta from a two-week peak, reflecting these combined influences on the market.
