Brazil suspended coffee exports Friday in a move that threw world coffee markets into turmoil in what was viewed as a move to force a new international price pact.
Officials in Brazil, the world's leading coffee producer, said that exports would remain frozen until the government decided whether it would participate in a world price pact. An international coffee agreement fell apart in 1989 when Brazil refused to give in to pressure, mainly from the United States, the leading consumer nation, to reduce its world marketing quota.Brazil's latest action surprised coffee traders in London as well as exporters in Brazil.
In London, Rob de Jong, managing director of trading house E.D.& F. Man Coffee Ltd. said, "This obviously came as a bombshell."
The widely traded robusta variety for May delivery opened at $1,200 a ton, after closing in London at $1,040 Thursday.
De Jong blamed Brazil for allowing the ICA to collapse in 1989.
"If the Brazilians are really serious about this (return to ICA), then the market has to go up," he said.
In Brazil, coffee producers and exporters were also surprised.
"The news (of the export suspension) is as unbelievable as if someone announced a military rebellion in Holland," said Orlando Correa, a consultant with the Coffee Chamber of Commerce of Rio de Janeiro.