World coffee prices have collapsed after US President Donald Trump eliminated a 40% tariff on imports of Brazilian agricultural products, Reuters reports.
In September, retail coffee prices in the US rose 40% year-on-year, partly due to the tariffs. A survey found that rising food prices were a major factor in Trump's approval rating falling to its lowest level since he returned to office. The president's overnight decision followed a similar order announced last Friday to remove tariffs on coffee and dozens of other products from producing countries. Brazil, the world's top coffee producer, supplies the United States, the world's largest coffee consumer, with about a third of its coffee bean output. Arabica coffee futures on the ICE Futures Exchange, used as a benchmark for pricing physical coffee around the world, fell 4.4% to $3.6020 a pound at 12:38 GMT, after earlier plunging more than 6% to a two-month low. Futures prices for robusta coffee beans, which are typically used in soluble coffee, not roasted and ground blends, where arabica dominates, fell 4.2% to $4,438 a metric ton, after earlier falling 8%.
A Europe-based trader at a leading global coffee trading house said the global arabica crop was still in deficit, certified on the exchange and industry stocks were low, the industry was short of supply and needed to buy, and there were still supply risks related to the La Nina weather phenomenon.
Separately, dealers were trying to assess the damage from floods and landslides in Vietnam's coffee region, a leading robusta producer, where the death toll stood at 41.
A London-based coffee broker said the market had overreacted somewhat to Trump's tariff rollback, given that to some extent it was expected. "The move seemed more of a shock than it probably should have been", he said.
London cocoa fell 0.9% to 3,394 pounds per metric ton, New York cocoa fell 0.8% to $5,241 per ton, raw sugar rose 0.6% to 14.74 cents per pound and white sugar rose 0.7% to $422.90 per ton.