Coffee prices have rebounded in March 2026 on renewed supply‑chain disruptions, but the market is moving into a riskier phase as soaring fertiliser costs threaten future production and yields. The immediate balance looks firm rather than tight, yet geopolitical tensions in West Asia and weakening export flows point to higher volatility ahead.
After three months of decline, global coffee benchmarks turned higher in March, led by Arabica, as logistics bottlenecks around the Strait of Hormuz drove freight costs and market risk premia higher. At the same time, the International Coffee Organization (ICO) warns that the true impact of today’s fertiliser shock will be felt in the 2026–27 crop cycle, when many farmers may be forced to cut input use. With exports from key origins already softening and Brazil’s record crop outlook meeting execution risks, the price floor for coffee is likely rising even if near‑term supplies remain adequate.
📈 Prices & Spreads
The ICO Composite Indicator Price rose 2.3% month‑on‑month in March to 273.70 US cents per pound, ending a three‑month losing streak and underscoring renewed risk premia linked to freight and geopolitical tensions. Within this, Arabica segments outperformed while Robusta lagged, reflecting both differential demand and the market’s focus on higher‑quality origins.
Colombian Milds gained 2.0% to 337.45 US cts/lb, Other Milds rose 4.0% to 334.34 US cts/lb, and Brazilian Naturals climbed 3.9% to 320.51 US cts/lb, while Robusta prices slipped 1.6% to 176.77 US cts/lb. On the exchanges, New York ICE Arabica futures increased 0.5% to 290.18 US cts/lb, whereas London ICE Robusta fell 2.5% to 161.91 US cts/lb, highlighting a modest widening of the Arabica–Robusta spread. Recent early‑April data point to a still firm but choppy Arabica structure, with May New York contracts dipping intramonth before recovering on renewed geopolitical concerns.
🌍 Supply & Demand Dynamics
Despite the March price recovery, global coffee exports remain under pressure. Total exports in February 2026 fell 5.7% year‑on‑year to 11.46 million bags, with Robusta exports down 3.7% to 4.05 million bags. South America led the decline, with regional exports dropping 21.8%, and Colombia registering a sharp fall due to lower production, signalling tighter availability of high‑quality Arabica.
India stands out as a relative winner from these disruptions. February 2026 coffee exports reached 0.79 million bags, up from 0.57 million a year earlier (+38.5%), supported by reduced Vietnamese shipments over the Tết holiday and stronger demand for Indian Robusta and soluble coffee. India’s full‑year 2025–26 performance was particularly strong, with export volumes exceeding 407,000 tonnes and values reaching a record USD 2.136 billion, confirming its growing role as a flexible supplier when other origins slow.
At the same time, Brazil—the key global price setter—shows a nuanced picture. Official and private forecasts still point to a potentially record 2026 crop, supported by generally favourable growing weather and expanded area in recent months. However, Q1 2026 exports fell over 20% year‑on‑year, and recent reports highlight logistical constraints and farmer selling resistance, limiting immediate availability for export even as on‑farm supply improves.
📊 Fundamentals & Fertiliser Shock
The most consequential medium‑term development is not current harvest size but input costs. The ICO highlights that 25–33% of global fertiliser trade, including around one‑third of nitrogen fertilisers such as urea, transits the Strait of Hormuz, a region now facing persistent geopolitical tensions and shipping disruptions. With the Gulf also a key fertiliser production hub, elevated energy and logistics costs are feeding directly into farm‑gate input prices.
For the ongoing 2025–26 coffee crop, the impact is limited: most fertiliser applications have already been made. The real risk lies in the 2026–27 cycle and beyond, as sustained high prices could force growers—especially smallholders in Latin America, Africa and Asia—to reduce application rates, cut back on quality‑enhancing inputs, or delay field rejuvenation. This would likely translate into lower yields, more variable quality, and structurally tighter supply, even if weather conditions remain benign.
Current market balances still lean toward comfort in 2026 thanks to Brazil and Vietnam, and speculative positioning data suggest funds are not heavily extended on the long side. But with export flows already weakening and certified exchange stocks only modestly rebuilt, any confirmation of reduced fertiliser use or new weather shocks in major Arabica belts could quickly flip sentiment from surplus to deficit pricing.
🌦️ Weather & Regional Outlook
Weather conditions in key producing regions are mixed but not yet alarming. In Brazil, recent assessments point to generally favourable conditions for the developing 2026–27 harvest, with harvesting expected to accelerate from late April onwards under mostly cooperative weather. Localised excess rainfall and earlier flooding episodes have affected some areas, but large‑scale yield losses are not yet evident.
In contrast, parts of Colombia and Central America have faced pockets of adverse weather in recent months, compounding existing structural issues such as ageing trees and high production costs. This helps explain the sharper export decline from South America and underscores why the market is attaching a growing premium to washed Arabicas. For Robusta, Vietnam’s weather pattern has normalised after earlier disruptions, but logistics and farmer selling behaviour remain key short‑term swing factors.
📆 Market Outlook
Short‑Term (next 1–3 months)
- Prices are likely to remain firm to slightly higher, supported by ongoing freight and shipping disruptions in West Asia and uneven export flows from Brazil and Colombia.
- Arabica is set to retain a premium over Robusta, with quality‑focused demand and tighter washed supplies offsetting expectations of a large Brazilian crop.
- Volatility should stay elevated around geopolitical headlines and any updates on fertiliser trade routes through the Strait of Hormuz.
Medium‑Term (2026–27 crop cycle)
- Persistently high fertiliser prices are the key upside risk, likely raising production costs and pressuring yields if farmers cut application rates.
- Global supply could tighten structurally from 2026–27 onward, even if the 2026 harvest is large, as under‑fertilisation and delayed renovation weigh on subsequent output.
- Importing countries and roasters may need to plan for a higher long‑run equilibrium price band and greater quality differentials across origins.
🧭 Trading & Hedging Suggestions
- Roasters and importers: Consider incrementally extending coverage on Arabica for late 2026–27 needs, using current price stability to hedge against future supply‑driven upside stemming from fertiliser‑related yield losses.
- Producers: Use the recent price rebound to lock in margins for part of the 2026 crop, but retain some upside exposure given the risk of further disruptions in fertiliser and energy markets.
- Spread traders: Monitor the Arabica–Robusta spread; a structurally tighter Arabica balance and continued weakness in Robusta exports suggest scope for further premium widening if weather or input shocks intensify.
📍 3‑Day Directional Outlook (EUR‑based)
| Contract | Region/Exchange | Directional Bias (next 3 days) | Indicative EUR Trend* |
|---|---|---|---|
| Arabica futures | ICE New York | Mildly bullish | Firm to slightly higher in EUR, supported by geopolitics and softer exports |
| Robusta futures | ICE London | Sideways to slightly bearish | Stable to marginally lower in EUR amid relatively better near‑term supply |
| Physical Arabica | Europe import markets | Firm | Stable to slightly firmer differentials in EUR for high‑quality origins |
*Indicative: reflects directional bias rather than precise price levels; all values should be converted from US‑dollar benchmarks into EUR using prevailing FX rates.
