Coffee prices stabilize amid dispute between Brazil and the US over tariffs.
With a possible tariff starting August 1st, coffee roasters are scrambling to secure stocks, and Brazil is promising retaliation.
LONDON (Reuters) - Global coffee prices stabilized on Tuesday, after rising in the previous session in a volatile market with low volume, driven by the US threat to impose 50% tariffs on almost all imports from Brazil starting August 1st.
Brazil, the world's largest coffee producer, said it will retaliate if tariffs are imposed and is seeking negotiations with the affected U.S. companies, as well as pressing its own companies to coordinate with their counterparts. EUA to help reverse the measures.
The US is the world's largest consumer of coffee, and 33% of its consumption comes from Brazil.
US roasters are scrambling to secure local inventories before the tariff takes effect, and traders said the market is prone to volatility as heightened uncertainty has reduced trading volume.
Arabica coffee futures traded on the ICE exchange, considered a global price benchmark, closed down 4,5 cents, or 1,5%, at $2,9735 per pound, with investors pausing after raising prices by 5,4% in the previous session.
A similar price trend was observed for the café robusta -- typically used to make instant coffee --, with futures traded on ICE falling 3,2% to $3.408 a ton, after rising 9,4% at Monday's close.
The tariffs, if implemented, would virtually halt shipments of Brazilian coffee to the United States, and the country would be unable to source similar volumes or prices elsewhere, according to coffee trade sources.
Meanwhile, raw sugar futures on ICE rose 0,26 cents, or 1,6%, to 16,56 cents per pound, while white sugar rose 5,4% to $494,10 per ton.
(Reporting by May Angel and Marcelo Teixeira)
