REUTERS/JOSE ROBERTO GOMES/FILE PHOTO/FILE PHOTO
The robusta coffee fruits are seen in Sao Gabriel da Palha, Espirito Santo state, Brazil, in May 2018. Global coffee prices plunged today after President Donald Trump removed 40% tariffs on imports of Brazilian agricultural products.
LONDON >> Global coffee prices plunged today after President Donald Trump removed 40% tariffs on imports of Brazilian agricultural products.
U.S. retail coffee prices rose by an annual 40% in September, due in part to tariffs. Rising food prices are a major factor behind Trump’s approval ratings falling to their lowest since his return to power, a Reuters/Ipsos poll found.
Trump’s overnight move follows a similar order announced Nov. 14 to roll back duties on coffee and scores of other products from producing countries.
Top coffee grower Brazil supplies the United States, the world’s largest coffee consumer, with about a third of its beans.
At 1238 GMT, arabica coffee futures on the ICE exchange, used as a benchmark to price physical coffee around the world, were down 4.4% at $3.6020 per lb, having earlier plunged more than 6% to two-month lows.
Futures prices for robusta coffee beans, typically used in instant coffee rather than in the roast and ground blends where arabica dominates, were down 4.2% at $4,438 a metric ton, having earlier sunk 8%.
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“(We) need the market to digest this. More downside? Maybe, but I do not believe we’ll go below $3/lb. If anything I would be a buyer into whatever market dip comes from this news,” said a Europe-based trader at a top global coffee trade house.
He explained that the global arabica crop is still in deficit, exchange-certified and industry stocks are low, the industry is short on supply and needs to buy and there are still supply risks linked to the La Nina weather phenomenon.
Tariffs aside, dealers were also trying to gauge the damage from floods and landslides in top robusta grower Vietnam’s coffee-growing region, where the death toll as of Thursday stood at 41.
A London-based coffee broker said the market had over-reacted somewhat to the Trump tariff u-turn given it was to some extent expected. “(The move) seemed to shock more than it probably should have,” he said.
In other soft commodities, London cocoa fell 0.9% to 3,394 pounds a metric ton, New York cocoa fell 0.8% to $5,241 a ton, raw sugar rose 0.6% to 14.74 cents per lb while white sugar gained 0.7% to $422.90 a ton.