On the same day, the White House also announced a 50% tax on some imported copper products, causing the market to immediately react and weaken. Closing, widespread selling pressure pulled the MXV-Index down more than 0.4%, to 2,226 points.
Coffee prices react mixedly after White House announcement
At the end of yesterday's trading session, the industrial raw materials group recorded strong selling pressure with 6/9 items simultaneously closing in red. Notably, the coffee market's developments became mixed after the latest announcements from the White House.
At the close of yesterday’s session, Arabica coffee prices fell more than 1% to $6,468/ton, while Robusta jumped nearly 2% to $3,411/ton. This reflected a clear divergence in investor sentiment in the face of the risk of a change in the supply-demand balance.
Yesterday (July 30), US President Donald Trump announced the application of an additional 40% tariff on goods from Brazil, raising the total tax rate on goods from this country to 50%. The executive order was signed today with the implementation date being postponed to August 6. However, coffee is not yet on the list of exempted goods, while negotiations between the two sides are still ongoing and have not shown any signs of ending. Currently, Brazilian coffee accounts for about 30-34% of the market share in the US market, in the context that this is a country with one of the highest coffee consumption rates in the world, with 76% of the population using coffee daily.
According to MXV, the imposition of tariffs will not only affect the competitiveness of Brazilian coffee, but also increase prices in the US, causing inflation, and these taxes will eventually be passed on to US consumers at the time of purchase. The coffee industries in Brazil and the US are closely linked through the supply-demand relationship, which cannot be separated, so any factor affecting them will have a profound impact on the economies of both countries.
Meanwhile, the coffee production situation still recorded relatively positive signals.
In terms of inventories, the volume of certified Arabica coffee on the ICE exchange continued its sharp downward trend. Specifically, on July 30, Arabica inventories on ICE decreased by another 8,484 bags, down to 791,842 bags - the lowest level since April 16.
Selling pressure has spread beyond coffee to the entire metal market. At the end of the trading session on July 30, COMEX copper prices fell 0.7% to $12,315/ton. Notably, in this session, COMEX copper prices recorded the largest one-day drop in history right after the US announced the scope of tariffs on imported copper.
According to a statement released by the White House on July 30, a 50% tax will be imposed on some imported copper products starting August 1. However, contrary to months of market expectations, refined copper, a US product that relies heavily on imported supplies, is not subject to the tax. Instead, the tax policy targets semi-finished copper products such as copper pipes, copper wires, copper bars, copper sheets, and copper-rich derivatives such as pipe joints, cables, connectors, and electronic components. Immediately after information about the scope of the tax was announced, copper prices on the market plummeted, at one point falling more than 18%.
The tax move will help stabilize input costs for domestic companies that produce semi-finished copper products from refined copper. However, the domestic mining industry has not benefited as much as previously expected.
In addition, copper prices are also under pressure from the US Federal Reserve (Fed) keeping interest rates at 4.25 - 4.5% in its July policy meeting.
Higher interest rates will continue to strengthen the US dollar, making dollar-denominated commodities such as copper more expensive for investors using other currencies, which could reduce demand and put pressure on prices. The US dollar index continued to rise for the fifth consecutive session yesterday (July 30), increasing by 0.94% to 99.82 points.
Source: https://baochinhphu.vn/my-ap-thue-50-len-brazil-mxv-index-mat-da-giam-xuong-2226-diem-102250731090626473.htm
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