Coffee prices collapse after U.S. duties are lifted for Brazil. Shares of coffee shops are rising

Global coffee prices collapsed on Friday, November 21, after US President Donald Trump slapped 40 percent duties on agricultural imports from Brazil. Trump's decision followed a similar order last Friday - then he waived duties on coffee and about 200 other categories of food products, Reuters writes.

In trading on Friday, Arabica futures on the ICE exchange fell 6% to their lowest level in two months, but then slowed to -1.6%, to about $3.7 per pound. Robusta futures were down 8% before correcting to -2.5%. In addition to the removal of duties, market participants are assessing the impact of floods and landslides in key coffee regions in Vietnam, the largest producer of Robusta. As of Thursday, the death toll there had reached 41, Reuters noted.

Quotations of coffee chains were growing in trading on Friday. For example, the securities of Starbucks jumped by almost 4%, Dutch Bros - by 8%, Luckin Coffee - by 2%. Shares of roasted coffee supplier Coffee Holding rose by 5%.

"We need the market to digest this. Could the fall continue? Ma possible, but I don't think we will go below $3 a pound. In any case, I would buy on a downturn," a European trader at one of the world's biggest coffee trading houses told Reuters. He said the global arabica market was still in short supply, certified exchange-traded and industrial stocks remained low, the industry was short of supplies and had to buy, and crop risks remained due to the La Niña weather event - floods in Vietnam.

"We expect exports to rebound," StoneX analyst Fernando Maximiliano told Bloomberg. Concerns about the U.S. market deficit had been pushing futures up, but some easing of tensions is now expected, he said.

Brazil is the world's largest coffee producer. It supplies about a third of the bean needs of the United States, the largest coffee consumer, Reuters explains.

The inflation index for roasted coffee hit a record high in August, according to data from the Bureau of Labor Statistics cited by Bloomberg. U.S. retail coffee prices rose 40% year-over-year in September - partly due to duties on goods from Brazil, Reuters writes. Rising food prices have been a key factor in President Trump's approval rating falling to its lowest since he returned to power, Reuters/Ipsos polling data show. Coffee prices climbed to an all-time high in October as duties exacerbated shortages caused by weak harvests around the world.

"Two-thirds of American adults drink coffee every day, and each cup will be cheaper thanks to President Trump's decision to slap duties on coffee imports from Brazil," the National Coffee Association said in a statement quoted by Bloomberg.

This article was AI-translated and verified by a human editor