Arabica coffee price: Effects of the US-Iran war spill over to agricultural assets
Coffee price edged higher on Thursday as the geopolitical conflict in the Middle East heightens concerns over increased logistics costs. At the same time, below-average rainfall in the leading Arabica coffee-producing country, Brazil, is impacting the supply dynamics. The appreciation of the Brazilian Real is yet another key driver in the global coffee market.
The benchmark for Arabica coffee price, Coffee C futures, rose to its highest level in about a week to trade at $292.60 at the time of writing. At the same time, ICE futures in New York rose to the highest level in two weeks, rallying by over 3%.
US-Iran conflict spills over to the coffee market
Similar to other agricultural assets, the weather pattern remains a key driver in the coffee market. In particular, investors are keen on the prevailing weather in Brazil. Below-average rainfall is set to lower production yields while supporting prices. Nonetheless, The South American country is the leading producer and exporter of Arabica coffee, accounting for about 40% of the global supply.
At the same time, the appreciation of the Brazilian Real is curbing export incentives and further weighing on the global supply. Indeed, the currency has become the top-performing currency in 2026; surging by about 13% YoY against the US dollar. Global rate paths and the country’s fiscal dynamics are key drivers of the appreciation. Some analysts forecast a corrective pullback, which may curb Arabica coffee prices.
Additionally, the ongoing geopolitical tensions in the Middle East are offering support to Arabica coffee price. Hopes of peace talks between the US and Iran have dwindled after the Islamic Republic seized ships along the all-important Strait of Hormuz. Besides, the Iranian parliament’s deputy speaker indicated that the country has received its first tolls from vessels using the chokepoint.
The conflict has heightened concerns over increased logistics costs. On Thursday, Brent crude oil prices rallied to its highest level in over two weeks. The energy shock has spilled over to agricultural commodities by causing a decline in certified stockpiles. However, Trump’s move to indefinitely extend the ceasefire agreement with Iran has eased the woes.
Arabica coffee price technical analysis
Coffee price began Thursday’s session on a high after dropping to a seven-week low earlier in the week. After hitting an intraday low of $278.35 on Tuesday, the benchmark Coffee C futures were trading at $292.60 at the time of writing.
Late last week, the prices plunged below the support level of $287.85 amid heightened volatility. A look at its daily chart signals curbed gains in the immediate term as investors weigh the ongoing geopolitical tensions and supply dynamics.
At an RSI of 48, Arabica coffee price will likely remain range-bound in the ensuing sessions. Besides, the selling pressure is still on despite the expected rebound. Based on both the fundamentals and technicals, the range between the 25-day EMA at $294 and the support level of $282 will be worth watching. Further rebounding will likely curb the gains along the medium-term 50-day EMA at $301.
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