Arabica coffee futues hit record high on supply worries due to US tariff threat against Colombia

Arabica coffee futues surged to a record high on Monday on worries supply risks due to US tariff threat against Colombia. Futures in New York rose as much as 0.9 per cent on Monday and are up more than 80 per cent from a year ago.

In Europe, continuous arabica coffee futures on the ICE added 0.8 per cent to $3.50 a pound in midday trading. Earlier in the session, they reached as high as $3.56.

Over the weekend, US President Donald Trump ordered his administration to impose 25% tariffs and sanctions on Colombia for refusing to allow two military planes carrying deported migrants to land.

Soon after, the White House said Trump would hold off on imposing those sanctions after Colombia had agreed to all of Trump's terms, including to repatriate migrants into the country.

The Trump’s tariff threat rattled the outlook for global coffee supply at a time when most-active futures for the arabica variety have surged amid harvest shortfalls in major coffee growers, including Brazil and Vietnam.

Lackluster crops have strained coffee supplies, with the US Department of Agriculture (USDA) projecting world stockpiles in the 2024-25 season to fall to a 25-year low.

In 2024, Brazil had its harshest drought in history and coffee fields felt the lack of moisture. Rains arrived later in the year, but trees did not have enough vitality to convert the flowering into good fruit load.

According to USDA data, Colombia is the world’s third-largest coffee producer and second-largest for the arabica variety favored for specialty brews.

The US imports about 30 per cent of its coffee from Colombia. Overall, the US imported $16.1 billion in goods from the South American country in 2023, Census Bureau data showed.

The coffee market will be on the lookout for updates on the crop estimates expected in the next 30 days.