Dollar Decline Boosts Coffee Futures; Robusta Hits 1.5-Month High

March arabica coffee (KCH26) rose +4.45 (+1.28%) and March ICE robusta coffee (RMH26) gained +103 (+2.56%) on January 23, as a 3.5-week low in the dollar index (DXY00) prompted short covering across commodities. Shrinking Brazilian exports, down -18.4% y/y to 2.86 million bags, supported prices amid below-average rainfall in Minas Gerais, Brazil's key arabica region. However, robusta faces bearish pressure from Vietnam's soaring exports (+17.5% y/y to 1.58 million metric tons) and projected output growth of +6% y/y to 1.76 million metric tons. Global supplies remain ample, with USDA FAS projecting a +2.0% increase in world production for 2025/26, though ending stocks are forecast to decline by -5.4%. Despite this, tighter global supplies underpin price support, according to the International Coffee Organization (ICO).