LONDON: Coffee and cocoa futures on ICE fell on Friday as investors held out hope the Trump administration would exempt the commodities from the slew of tariffs it has imposed on dozens of trading partners.
Nearly the entire U.S. landmass is unsuitable for growing tropical commodities like coffee and cocoa.
Cocoa
London cocoa futures were down 0.3% at 5,500 pounds a metric ton at 1200 GMT, having closed up 3.5% on Thursday.
Malaysia said on Friday the U.S., which has slapped a 19% tariff on the country, is open to not imposing tariffs on cocoa, rubber and palm oil, though a deal is still being finalised.
The U.S. Commerce Secretary had said on Tuesday commodities not grown in the U.S. could be exempt from tariffs if deals with producing countries are reached.
Commerzbank noted, however, that in the absence of trade deal talks, tariffs of 15% will apply to Ivory Coast and Ghana, which produce about 60% of the world’s chocolate-making beans.
Elsewhere, dealers said sub-optimal weather and better than expected results from chocolate major Hershey are limiting losses in cocoa.
New York futures fell 0.5% at $8,458 a ton, having closed up 3.3% on Thursday.
Arabica coffee steadies as market awaits tariff developments
Coffee
Arabica coffee futures fell 2.5% to $2.8850 per lb, having closed up 0.8% on Thursday.
The U.S. on Wednesday slapped a 50% tariff on top coffee grower Brazil, effective August 6, though Brazilian exporters and U.S. sector lobbyists are continuing to push for exemptions.
Coffee prices are expected to rise short-term if the 50%tariff goes ahead, with a scramble for stocks and a major upheaval in global trade flows likely as supplies are redirected.
The U.S. imports about a third of its coffee from Brazil, but tariffs on the country are seen as political rather than economic in nature, meaning they are more likely to stick.
Robusta coffee fell 2.2% to $3,260 a metric ton, having closed down 0.4% on Thursday.
Indonesia’s Sumatra robusta coffee bean exports in June reached 53,870.2 tons, up 390% year-on-year, data showed.
Indonesia is the world’s second-largest robusta exporter.
Sugar
Raw sugar fell 0.7% to 16.24 cents per lb.
Sugar production in Brazil’s key center-south region rose 15.07% in the first half of July when compared to the year-earlier period, industry group UNICA said.
While white sugar lost 0.5% to $465.50 a ton.
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