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MILAN – The upward trend in coffee futures has come to a halt. Yesterday (Thursday 28 August), both markets closed lower. In New York, the December contract fell by 2% to close at 377.50 cents after hitting new highs during trading. Losses were more modest in London, where the November contract fell by 1.3% to settle at $3,775.
Market participants were dampened by news from the US market, where there are fears that higher prices will curb demand in the United States. JM Smucker Co., the leading competitor in the US market with the Folgers and Café Bustelo brands, has announced further price increases to keep up with higher tariffs on coffee imports.
As Pharos Consultoria analyst Haroldo Bonfá points out, the higher costs have not yet been passed on to the American end consumer.
According to Vicente Zotti, managing partner at Pine Agronegócios, all coffee shipped from Brazil by 5 August has until 5 October to arrive in the US without incurring duties. The United States has around 30 to 40 days of stock left, consisting of what has already been purchased, shipped, and is due to arrive.
“American buyers continue to consume their stocks,” he explained. However, all the new contracts are currently on hold, awaiting clarification of Washington’s trade policies.
There is hope that the Trump administration will ultimately decide to exempt coffee from the 50% tariffs on goods imported from Brazil. However, no concrete progress has yet been made in this regard. Brazil currently exports almost 8 million bags of coffee to the US each year.
Meanwhile, sharp rises in the coffee prices continue to generate record revenues for Vietnam. Last month, the Asian country earned over $560 million from coffee exports in all forms. According to figures released by the Ministry of Agriculture and Environment, this brought the total for the first seven months of the year to $3.6 billion.
Nguyen Nam Hai, president of the Vietnam Coffee Cocoa Association (Vicofa), said in an interview with Viet Nam News that the international coffee market has never been as favourable as it is now.
With high prices and growing demand, coupled with Vietnam’s stable supply, the country is in an advantageous position, he said.
However, to fully capitalise on this opportunity, Vietnam needs to delve deeper into processing, rather than relying on raw bean exports, he added.
The share of deep-processed coffee, including roasted, instant and specialty coffee, currently accounts for only 12-15 per cent of total exports, according to Vicofa.
This figure is modest compared to the products’ potential. In Brazil and Colombia, the ratio ranges from 30-40 per cent, said the same source.
