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Arabica coffee futures surged to record levels on Monday, driven by escalating concerns over supply risks following a US tariff threat against Colombia. In New York, futures rose as much as 0.9% during the trading session and have climbed more than 80% compared to the same period last year.
European Coffee Prices Follow Suit
In Europe, continuous arabica coffee futures on the ICE exchange increased by 0.8%, reaching $3.50 per pound in midday trading. Earlier in the day, prices peaked at $3.56 per pound. This surge reflects the global market’s reaction to geopolitical tensions and ongoing supply challenges.
US-Colombia Tensions Spark Concerns About Coffee Prices
Over the weekend, US President Donald Trump directed his administration to impose a 25% tariff and sanctions on Colombia. This decision followed Colombia’s refusal to allow two US military planes carrying deported migrants to land. However, after Colombia agreed to comply with Trump’s demands, including accepting the repatriation of migrants, the White House announced a temporary hold on the sanctions.
Despite the reprieve, the tariff threat has heightened fears about the stability of global coffee supply chains. Colombia’s compliance with US terms may ease immediate tensions, but the market remains cautious.
Coffee Supply Shortfalls in Major Producing Nations
The tariff uncertainty comes at a time when coffee supplies are already strained. Key producers such as Brazil and Vietnam have experienced significant harvest shortfalls. The US Department of Agriculture (USDA) predicts that global coffee stockpiles for the 2024-25 season will drop to their lowest level in 25 years.
Brazil, the world’s largest coffee producer, suffered its harshest drought on record in 2024. The prolonged dry conditions severely impacted coffee fields, with insufficient rainfall preventing trees from producing a healthy fruit load. Although rains arrived later in the year, they were too late to reverse the damage.
Colombia’s Critical Role in the Coffee Market
Colombia, the world’s third-largest coffee producer and the second-largest supplier of arabica beans used in specialty brews, is a crucial player in the global market. The United States imports approximately 30% of its coffee from Colombia, highlighting the country’s importance in meeting US demand. In 2023, the US imported $16.1 billion worth of goods from Colombia, according to Census Bureau data.
With the coffee market on edge, traders and analysts will closely monitor upcoming crop estimates expected within the next 30 days. These reports will provide critical insights into the future availability of arabica coffee and help determine whether prices will continue to rise or stabilize.
