US coffee buyers requesting to postpone Brazil imports, Brazilian lobby says
SAO PAULO, Aug 12 (Reuters) - Coffee buyers in the United States have started requesting to postpone imports of Brazilian coffee following a 50% tariff imposed on Brazilian goods by U.S. President Donald Trump, local exporters' group Cecafe said on Tuesday.
The U.S. coffee industry, a major buyer of Brazilian coffee, is now in a holding pattern as it awaits news on tariff negotiations, said Cecafe President Marcio Ferreira.
"They have inventory for 30 to 60 days, which gives them some breathing room to wait a little longer for ongoing negotiations," Ferreira said.
In an email to Reuters, the United States' National Coffee Association said it did not have information on the matter.
Postponements in shipping would also hit exporters using advances on exchange contracts, or ACCs, a type of instrument used for pre-shipment financing, Ferreira said.
"With delays to business, an ACC is not complied with and we start to suffer from more interest, high fees, and additional costs, with overheads, for example," Ferreira said.
Furthermore, the current inverted futures market - where more distant contracts depreciate versus closer ones, he said, adding that postponing a shipment planned for September until December would cause an additional loss of $10 per bag.
"Postponing shipments ... has this cumulative and accentuated negative impact," Ferreira said.
While the tariff took effect this month, Brazilian green coffee exports to all destinations fell 28.1% in July compared to the same month a year ago, to 2.45 million 60-kilogram (132.3 lb) bags, according to Cecafe data.
Brazil, the world's top coffee producer and exporter, shipped 1.98 million bags of arabica beans abroad last month, a 20.6% decline year-on-year, while exports of the robusta variety dropped nearly 49% to about 461,000 bags, the data showed.
While the U.S. is the biggest consumer, other top customers include Germany, Italy, and Belgium, according to Cecafe.
Reporting by Roberto Samora and Oliver Griffin in Sao Paulo; additional reporting by Marcelo Teixeira in New York; Editing by Kylie Madry and Aurora Ellis
New reality. Different cause but same end result.
Wait what?foot-shooting 101
“A lot of it [strong container demand] is driven by a manufacturing boom in China and strong export growth pretty much everywhere in the world except for the U.S. during this quarter, where the tariff-on, tariff-off has had some dampening effect. ....But overall, I think outside of the United States, we see a continued very strong demand, and that is fuelling the earnings and the upgrade that we were able to do today."
- Vincent Clerc, CEO, A.P. Møller–Mærsk A/S
“If Walmart says they’re struggling [on price], then you know everyone else is going to struggle a little bit more,” Sundaram said. And the trade war could be especially damaging for brands that had weaker financials before tariffs were announced or that have less flexibility to offset higher import costs, he added.
Walmart historically has performed well in uncertain times and is seen as a bellwether for the health of U.S. consumers. During the pandemic and 2008 financial crisis, the company lowered its prices to go after market share and emerged with a bevy of loyal shoppers, said Bill Kirk, an analyst at Roth Capital Partners.
“We’ve seen during periods of economic uncertainty in the past, we tend to gain share and come out of the other side in an even stronger position,” Walmart chief financial officer John David Rainey told analysts Thursday. “We expect this period to be no different. We’ll play offense … but we’re not fully immune from the financial impacts in the short term.”
On Thursday, Walmart posted sales of $165.6 billion for its fiscal quarter ended April 30, a 2.5 percent increase year-over-year, narrowly missing analysts’ forecasts. Though McMillon said last month that the company might accept lower profits in the short term because of tariffs that Trump enacted in April, operating income rose 4.3 percent. The company also stuck with its full-year forecast of 3 to 4 percent net sales growth — which it first outlined in February before Trump’s tariff plans took shape.
Households earning more than $100,000 annually helped drive Walmart’s gains in market share in the past several quarters, executives said during investor calls. Those high-income shoppers can subscribe to Walmart’s paid membership program or spend extra on delivery fees, and the company can use that revenue to offset costs for more value-focused consumers, Kirk said.
Walmart reported U.S. profitability for its e-commerce business for the first time in its most recent quarter, with sales in that segment popping 21 percent. One-third of Walmart’s e-commerce customers paid extra for one- or three-hour delivery, Rainey said.
The Bentonville, Arkansas-based retailer’s inroads with wealthier consumers — and the booming e-commerce business driving it — allows it to stay “aggressive” as tariffs squeeze other companies, said Joe Feldman, an analyst at Telsey Advisory Group. Walmart is typically the last to raise prices during times of economic uncertainty, he said.
“They’re just better positioned to handle it than anybody else,” Feldman said.
A growing base of high-income consumers is a luxury that the vast majority of Walmart competitors don’t have. Even Kroger and Costco, two grocers expected to emerge stronger on the other side of Trump’s trade war, can’t offset tariff costs with booming e-commerce and advertising revenue like Walmart can, said Steven Shemesh, an analyst at RBC Capital Markets. The success of those peripheral businesses gives Walmart more flexibility to keep prices lower than even its most formidable grocery competitors, Shemesh said.
“They definitely have a little bit more cushion that other retailers [that are saying], ‘this is how much it costs from our supplier, we’re going to mark it up and give that to the consumer,’” Shemesh said, adding that the “magnitude and breadth” of price increases will likely be “significantly higher” at other retailers.
Certain tariffs on such U.S. trading partners such as Vietnam and Taiwan that are currently paused will probably drag down discretionary categories such as apparel, accessories and home goods, said Steven Carnovale, an associate professor of supply chain management at Florida Atlantic University. While Walmart sells those products, about 60 percent of its revenue came from grocery sales in its most recent fiscal year.
And because most grocery products are sourced in the United States, Walmart’s supply chain has a stronger backbone than retailers that sell more imported clothes, accessories and electronics, Carnovale said. Even if grocery import costs rise, Walmart can spread that expense across big-ticket items such as appliances and furniture, which wealthier shoppers may still buy during uncertain economic times, he said.
“Since so much of their sales are from food, and the vast majority of food is produced domestically, they’re, in my eyes, substantially less exposed,” said Jason Miller, a supply chain management professor at Michigan State University.
Walmart said Thursday that it wants to focus on keeping food prices steady, even as it navigates rising import costs for clothing, household goods and electronics. But tariffs on imports from countries such as Costa Rica, Peru and Colombia, which produce food that U.S. farmers can’t grow domestically or in sufficient quantities, have already made bananas, avocados, coffee and roses pricier, McMillon said.
For nonfood products subject to tariffs, Walmart plans to move production to different countries — a difficult task, McMillon said, but one the company has been “working on for years.” The retailer can also distribute these added costs across entire categories to keep shelf prices steady.
Walmart imports fewer goods from China than retailers that compete less in the grocery aisle, but analysts say no company escaped unscathed from the last month of tariffs. U.S. levies on Chinese imports soared to 145 percent in April before the Trump administration this week announced a deal to lower them to 30 percent for 90 days.
McMillon acknowledged that high tariffs on goods from China, especially those impacting electronics and toys, pose the greatest threat to the company. Walmart does not disclose the percentage of products it imports from China, but Evercore ISI analyst Greg Melich estimated that figure was about 10 percent in an April 9 research note. China provides 20 percent of Amazon’s imports into the U.S. and 30 percent for Target, Melich estimated.
Walmart’s supply chain is one of the strongest in retail, which gives it tremendous negotiating power with suppliers and foreign governments, Melich told The Washington Post last month. Some Walmart suppliers have gotten “creative” to dodge tariffs and swapped tariffed aluminum for levy-free fiberglass, McMillon said.
Unlike its competitors, Walmart probably has supply chain redundancies that make it easier to shift production quickly, said Alan Baer, the chief executive of OL USA, a logistics company. For example, he said, even if Walmart prefers to import a certain style of white T-shirt from China, its suppliers in countries such as Vietnam, Thailand and Indonesia can easily manufacture the same product.
Walmart also gets better deals on shipping costs. According to one industry official, who spoke on the condition of anonymity to disclose nonpublic information, Walmart typically pays $400 to $600 less per shipping container than other retailers.
Walmart is often the largest customer for the container shipping companies it works with, and when it signs a contract to move its goods, that often sets the floor for others as they negotiate prices, Baer said. Once its products arrive in the U.S., Walmart’s efficient domestic supply chain and national distribution network give it an even stronger advantage over its competitors, Baer said.
“It’s almost like you’re taking Legos and piling them up on top of each other, and Walmart just happens to be the bottom brick because it’s always there, every week, all the time,” he said.
It would appear the gullible American public are going to be paying seriously for The trumpets "Big Beautiful Bill".
Indeed, I said it from the start. He's bankrupted 6 times; now all he has left is adding the US to his resume.It would appear the gullible American public are going to be paying seriously for The trumpets "Big Beautiful Bill".
Still the gullible and red necks still probably believe that he is the Messiah.Indeed, I said it from the start. He's bankrupted 6 times; now all he has left is adding the US to his resume.
All he's trying to do is hide everything and control the narrative that everything he's done is right.Still the gullible and red necks still probably believe that he is the Messiah.
When the hip pocket nerve is smashed the dum-dums just might wake up.
I don't doubt for a moment that the tariffs will bring price pain to consumers.
Wouldn't be surprised if he doesn't back flip once again.Hope King Don is all good - his big announcement was supposed to start 40 minutes ago
I don't doubt for a moment that the tariffs will bring price pain to consumers.
As I've said many times though, what's the alternative? What other way is there to bring productive industry and critical supply chains back to the US or indeed any Western country?
It's much like going on a diet. It sucks yes, but the moment you accept the alternative involves death, all of a sudden the diet seems like a less bad option.
Same in Australia. One doesn't need to be an economist to see that tensions are rising and at some point it's going to boil over. At some point the public's had enough of inflation and wants actual solutions that don't involve more of the same managed decline.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?