Global coffee prices plunge after Trump removes tariffs on Brazil

NEW YORK — Global coffee prices plunged on Friday after US President Donald Trump removed 40-percent tariffs on imports of many Brazilian agricultural products, including green coffee beans.US retail coffee prices rose an annual 40 percent 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 last Friday 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 and the end of import tariffs should allow for a quick flow of Brazilian beans to depleted US coffee stocks.Arabica coffee futures on the ICE exchange closed nearly 2 percent down to $3.6945 per pound (lb), having earlier plunged more than 6 percent to two-month lows.Robusta coffee, typically used in instant coffee rather than in the roast and ground blends where Arabica dominates, fell 2.7 percent to $4,506 a metric ton, having earlier sunk 8 percent.“[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, stocks are low, the industry is short on supply and needs to buy, and there are still supply risks linked to the La Niña weather phenomenon.Some traders will rush to ship Brazilian beans to the US.“Once the announcement of tariff reductions was made, we will divert a shipment under planning for Germany to go instead to the US,” said Stephen Hurst, managing director at Mercanta coffee traders.Tariffs aside, dealers were also trying to gauge the damage from floods and landslides in top robusta grower Vietnam.A London-based coffee broker said the market had overreacted 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 2.2 percent to 3,879 pounds per ton, New York cocoa fell 2.3 percent to $5,159 a ton, raw sugar rose 0.8 percent to 14.78 cents per lb while white sugar gained 1 percent to $424.10 a ton.