LONDON (Reuters) -Global coffee prices plunged on Friday after U.S. President Donald Trump removed 40% tariffs on imports of Brazilian agricultural products including coffee and cocoa in the face of growing angst from American consumers about high food costs.
U.S. retail coffee prices rose an annual 40% in September, due in part to tariffs, and 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 tariff removal on Brazil follows a similar order announced last Friday to roll back duties on coffee and scores of other agricultural products from producing countries.
Top coffee grower Brazil supplies the U.S., the world’s largest coffee consumer, with about a third of its beans.
At 1017 GMT, arabica coffee futures on the ICE exchange, used as a benchmark to price physical coffee around the world, were down 4.6% to $3.5925 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 5% to $4,400 a metric ton, having earlier sunk 8%.
“(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 arabica crop was still in deficit, exchange certified and industry stocks were low, the industry was short on supply and needed to buy, and there were still weather risks due to the La Nina phenomenon.
(Reporting by May Angel; Editing by David Goodman and Alex Richardson)
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