Coffee prices in America have reacted to threats from United States President Donald Trump to place a 25% tariff on Columbia.
While the tariff was not imposed the local coffee market reacted with record-high prices earlier in the week.
A damaging trade war was avoided as Columbia (the 3rd largest coffee exporter in the world) has agreed to the U.S. President’s terms for accepting immigrants who entered the US illegally, back into Columbia.
CNN reported that the dispute began over two U.S. military flights carrying deportees to Columbia being approved for arrival and U.S. officials claiming that approval was revoked once en route to the country.
If imposed, the tariff would have seen coffee prices skyrocket for American consumers and had serious consequences on Columbian workers and the entire supply chain.
Arabica coffee accounts for 75% of the world’s production and is therefore the global benchmark for coffee futures contracts that trade on the InterContinental Exchange (ICE).
Futures contracts jumped from a closing level of US$3.48 a pound on Friday to $3.49 a pound on Monday, a 0.5% increase.
By mid-day Tuesday coffee futures moved even higher, to $3.53 a pound, a 1.7% increase from Friday.
The industry is already under immense pressure as the World Bank revealed earlier this month that Arabica coffee prices surged by 13% in December, a 60% year-over-year increase.
Robusta coffee prices also saw a 5% increase, more than doubling compared to the previous year.
On 10 December 2024, the price per pound of arabica peaked at US$3.47 – the highest it has been since 1977, according to a report from the Guardian.
The World Bank also said that global coffee production is estimated to have reached 169.8 million bags for the 2023-24 season and is expected to increase to 172.4 million bags in 2024-25.
However, the price of coffee globally remains responsive to supply chain concerns including weather and crop numbers affecting overall supply and demand.
Consumers and businesses are being challenged by the rising costs, with recent figures in Australia estimating that a cup of coffee could cost more than A$10 by the end of 2025.
At the time of writing this Arabic coffee traded on the ICE at $3.65 per pound, up 0.06% from Tuesday at $3.64.
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