December 1

12/1 – As mentioned last week, the President removed the remaining 40% tariff on Brazilian coffee, which pre-tariff accounted for one-third of all U.S. supplies. While tariff removal should eventually be bearish for prices, coffee is not in free fall yet. Futures rose $.11/lb last week. U.S. roasters have mostly exhausted their pre-tariff inventories and need to replenish quickly, especially with the winter consumption season upon us. Tariff removal should unlock big volumes of Brazilian coffee being held in bonded warehouses – but strong demand could hold higher prices in place a bit longer. Supply chain and contracting issues may take a little time to sort out. Additionally, the real rose hit a 30-day high against the dollar on 11/21, which tends to dampen Brazilian exports. Coffee futures (ICE), which were $2.93/lb on Aug 6 when the tariff was imposed, soared to a record-high of $4.32 on Sept 15, and closed at $4.11 on Friday (11/28).