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MILAN – Coffee futures prices were in free fall during the first session of the week. The ICE Arabica contract for December delivery fell 3.2% yesterday, Monday 27 October, dropping below the $4 threshold to close at 390.10 cents. In London, the most traded contract for January delivery fell by 2.3% to settle at $4,450.
Analysts say the main reason for the decline was a statement by Brazilian President Luiz Inácio Lula da Silva, who described his meeting with US President Trump on the sidelines of the ASEAN summit in Malaysia as ‘surprisingly good’.
He added that a “definitive solution” to the dispute between the US and Brazil could be found “in a matter of days”.
The agreement could leverage Brazil’s rich reserves of rare earths, second only to those of China.
The National Coffee Council (CNC) stressed in a statement that an agreement on coffee would be beneficial for both nations.
“If, on the one hand, it (the U.S.) is a fundamental market for Brazilian coffee, on the other, we note that American coffee consumers are being penalised by much more geopolitical – and, why not say, ideological – differences that have commercial repercussions, causing losses to both producers and consumers, as well as uncertainty and insecurity regarding the construction of a promising future for coffee farming, built up over more than two centuries and now seriously compromised,” said the CNC.
In other news, U.S. President Donald Trump said on Monday that coffee is among the products included in a new trade agreement with Vietnam, which would exempt it from a 20% base tariff.
‘We want to have some coffee,’ Trump told reporters aboard Air Force One en route to Tokyo, adding that he could visit Vietnam.
According to a BMI note, US stocks of Brazilian-origin coffee beans fell by 79% between Aug. 1 and Oct. 13. Overall, US coffee stocks declined by 35% in the same period.
