Coffee prices stabilise as US-Brazil tariff spat simmers

World coffee prices stabilised on Tuesday after soaring in thin, volatile trade during the previous session driven by the U.S. threat of 50% tariffs on nearly all imports from Brazil from August 1.

The world's biggest coffee grower, which has said it will retaliate in kind if the tariffs are imposed, is seeking talks with affected U.S. companies and is pushing its own firms to coordinate with U.S. counterparts to help reverse the measures.

The U.S. is the world's largest coffee consumer, and 33% of its consumption comes from Brazil.

U.S. roasters scrambled for supplies on Monday, sending coffee prices soaring, but dealers said the market is prone to volatility because the heightened uncertainty has limited the volume of trade.

At 1442 GMT, ICE exchange-traded arabica coffee futures KC2!, considered a global price benchmark, were down just 0.9% at $2.9885 per lb as investors paused after pushing prices up 5.4% in the prior session.

A similar price trend was evident for robusta - typically used to make instant coffee - with ICE-traded futures down just 2.1% at $3,446 a metric ton, after soaring 9.4% by the close on Monday.

The tariffs, if implemented, would all but halt Brazilian coffee shipments to the United States, and the country would be unable to source from elsewhere at similar volumes or prices, according to coffee trade sources.

In the long term, this would likely inflate already elevated U.S. prices, potentially curbing demand there while weighing on global prices as more Brazilian coffee becomes available to world export markets.

The spare Brazilian supply could eventually find its way to ICE exchange warehouses, said a dealer, which would weigh on world prices as ICE inventory figures are publicly available.

In other soft commodities, ICE raw sugar SB1! futures rose 1.3% to 16.51 cents/lb, after falling 1.6% on Monday despite fresh Brazil data showing falling production in the world's top exporter.

White sugar SF1! rose 1.6% to $476.40 a ton, London cocoa C2! was down 1.5% at 5,278 pounds a ton and New York cocoa CC2! fell 2.1% to $8,110 a ton.