[This Week On The Podcast] Markets, Tariffs, and The Volatility in Cacao with César Magaña from Belco
CHINA Tarrifs
As of May 12, 2025, the United States and China have agreed to a 90-day reduction in tariffs, aiming to ease escalating trade tensions. Under this agreement, U.S. tariffs on Chinese imports have been reduced from 145% to 30%, while China's tariffs on U.S. goods have decreased from 125% to 10%.
Implications for the Coffee Industry:
Equipment and Packaging: The temporary tariff reduction may provide short-term cost relief for importing these essential items, HOWEVER, this is still a 30% increase from before the prices of “Liberation Day”. This is an increase that few businesses in our industry have the margins to absorb. Also, please remember that the 25% steel and aluminum tariffs (232) + another 25% Trade retaliation (China) tariff (301) stack on top of the 30% this if they apply to the goods you’re importing (that takes it to 70% for the components that have steel or aluminum). Think grinders, thermoses, roasting machines, distribution tools, scales, espresso machines etc.
Supply Chain Decisions: The 90-day window offers a brief period of reprieve from the 145% tariffs that were previously being threatened, but the future remains uncertain, and businesses should proceed with caution when making purchasing and inventory decisions. Know your risks, know your customers, and know your financials so that you can make informed decisions.
Long-Term Planning: Given the temporary nature of this agreement and the ongoing volatility of, well, everything, it's prudent for businesses to explore alternative sourcing options and build flexibility into their supply chains in case of future disruptions.
Long story short, stay informed so that you can know exactly how this evolving situation will impact your business (or the business you work for). Also, keep communication lines open with your customers so that they understand changes to pricing and supply before they happen.
p.s. this is not business or financial advice x
The Market and prices
Arabica Prices: Recent Declines Amid Supply Optimism
After reaching record highs earlier this year, Arabica coffee prices have recently declined. As of May 13, 2025, prices fell to approximately 368 per pound, influenced by a stronger U.S. dollar and improved supply forecasts from major producers like Brazil and Vietnam
Brazil: Increased Production Forecast
Brazil's National Supply Company (Conab) has revised its 2025 coffee production forecast upward to 55.7 million 60kg bags, marking a 2.7% increase over the previous year. This adjustment is attributed to favorable weather conditions and a significant boost in robusta (conilon) coffee production
Vietnam: Production Challenges Persist
Vietnam, the world's second-largest coffee producer, is facing production challenges. The Vietnam Coffee and Cocoa Association has reduced its 2024/25 production estimate to 26.5 million bags, down from a previous estimate of 28 million bags, due to adverse weather conditions.
As discussed in recent podcast series, remember to take these reports with a grain of salt because we can never really know the agenda of the people/publications creating them. That being said, their creation can move the markets because speculators in the futures markets use them to make decisions. This, in turn, impacts coffee prices in the cash markets because everything is linked.
In these volatile times, relationships with your suppliers will prove to be amongst your most valuable assets. Ask questions, stay informed, and understand how your partners are viewing the future so that you can share the risk and go further together.
p.s. this is also not business or financial advice x
THE PODCAST (This Week): Cacao
Our guest on the podcast this week is César Magaña, Director of Cacao at Belco. This 5-part series takes a human-centered look at the cacao industry. From market volatility to the future of specialty cacao, this conversation bridges the complexity of systems with the stories of the people inside them.
Watch the series:
THE PODCAST (Next Week - Early Access): SCI
Our next guest is Tim Heinze, Director of Education at the Sustainable Coffee Institute (SCI). In this series, Tim and Lee take a close look at the new updates to the Q Grader program and why it’s sparking such strong responses across the industry.
Episodes:
SCA, SQI, and the "Evolved Q"
Does the Q Need Evolving?
Issues With The 2004 Cupping Form
Why People Are Polarised by The CVA
Sustainable Coffee Institute (SCI)
Early access now available to Patreon supporters. YouTube paid subscribers will get early access Thursday ahead of next week’s public release.
Registration is Open: Biochar for Farming
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Learn how to build more resilient farms through regenerative soil systems. Please share this with anyone you may think would be interested.
Access “Introduction to Regenerative Coffee Farming” On-Demand for as little as $10 at the new Map It Forward On-Demand Learning Hub here: www.ondemand.mapitforward.coffee
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