Coffee Prices Rebound as Middle East Disruption Sends Freight Costs Higher

The coffee market turned higher again in March as Middle East disruption pushed freight costs, insurance and energy bills up at the same time the International Coffee Organization’s benchmark had already been easing off. The ICO Composite Indicator Price averaged 273.70 US cents per pound, up 2.3% from February, ending three straight monthly declines and reminding roasters that geopolitics can move faster than crop forecasts.

The trigger was the closure of the Strait of Hormuz on 4 March. The ICO said the shock fed directly into shipping and bunker fuel costs, and the daily tape reflected what it called a “geopolitical rally” early in the month before prices later corrected. By 9 March, the I-CIP had climbed to 278.77 cents per pound. It then reached a monthly high of 285.83 cents on 24 March before slipping to 265.23 cents on 30 March. For importers, that kind of swing means more pressure on green buying, tighter hedging decisions and less room to absorb costs in café margins.

The business risk is broader than freight alone. The ICO said one-quarter to one-third of global fertilizer trade, including up to one-third of nitrogen fertilizers such as urea, transits through the Strait of Hormuz, and the Gulf region is also a major fertilizer producer. That creates a possible medium-term risk for the 2026/27 crop cycle even though much of the current 2025/26 crop had already received fertilizer applications. In other words, the shock is not just about the next vessel leaving port. It can echo into agronomy and next season’s supply decisions.

At the same time, supply fundamentals were still pulling the other way. February 2026 prices had fallen 9.9% month on month to 267.57 cents per pound on better Brazil crop expectations and forecasts of a global surplus in coffee year 2025/26. March export data also pointed to a softer flow of coffee moving out of origin, with global green-bean exports at 9.79 million bags, down 9.0% from a year earlier, and all forms of coffee exports at 11.464 million bags, down 5.7%.

The futures market split in the same way. New York ICE arabica rose 0.5% to 290.18 cents per pound in March, while London ICE robusta fell 2.5% to 161.91 cents. Late in the month, Marex Group Plc projected a record Brazil 2026/27 crop of 75.9 million bags, Sucafina forecast 75.4 million bags and StoneX lifted its estimate to 75.3 million bags, while also raising its global surplus view to 10 million bags. That mix of stronger supply expectations and fresh geopolitical risk is likely to keep pressure on green contracts, menu pricing and retail shelves well into the next buying cycle.