Orange juice futures in New York reached their highest level in four months, following President Trump's announcement of a potential 50% tariff on Brazilian goods. The active contract increased by up to 8.7% to $3.1385 per pound, marking the highest intraday level since early March.
The announcement of these tariffs, which include a variety of commodities such as coffee and beef, has generated trade concerns. Craig Elliott, a market analyst at Expana, noted that the U.S. increasingly depends on Brazilian imports due to declining orange production in Florida. The uncertainty surrounding the import tariff's impact "remains uncertain," but the trade volume at stake could "further erode Brazil's competitiveness," Elliott stated.
Brazil, which is a top supplier of orange juice to the U.S., had exports valued at nearly $1 billion last year, according to USDA statistics. Mexico follows as another key supplier, with volumes approximating a third of Brazil's exports.
CNN Brazil highlighted a potential diplomatic approach from Brazil, suggesting a reduction of the tariff to 30% and the discussion of export quotas for coffee and oranges. Brazil stands as the primary producer of arabica coffee, and futures for this premium bean saw a 4.4% rise, marking the largest intraday movement since late April.
Analyst Mark Bowman from ADM Investor Services commented on the levies, noting they "would severely impact Brazilian coffee shipments into the US," leading to price increases domestically and potentially affecting global coffee distribution. The levies could also heighten demand for existing coffee supplies in US exchange warehouses.
Source: Yahoo Finance
