On Friday, global markets saw a sharp drop in coffee prices after US President Donald Trump decided to cancel a 40% tariff on agricultural imports from Brazil. The move was a reaction to growing American dissatisfaction with high food prices. This is reported by Reuters, writes UNN.
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World coffee prices plummeted immediately after Washington's announcement. Tariffs, which had been in effect since the beginning of the year, were one of the factors in the increase in coffee prices in the US – in September, retail prices rose by 40%, which, according to a Reuters/Ipsos poll, negatively affected the president's approval rating.
Brazil, which provides a third of US coffee bean imports, felt the immediate impact of the decision: the market reacted with a sharp drop in futures. At 10:17 GMT, Arabica prices on ICE fell by 4.6% to $3.5925 per pound, updating a two-month low. Robusta fell by 5% to $4400 per ton.
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European traders remain cautiously optimistic.
The market needs to absorb this. Further decline? Possibly, but I don't believe we'll fall below $3 a pound. I'd rather be a buyer, even if this news leads to any market decline.
According to him, despite the short-term drop in prices, the market remains tense: the shortage of Arabica continues, and certified stocks are small.