Big Traders’ Plans For Sustainable Crops Upended By EU Delay – CoffeeTalk

The European Union’s delay in implementing the EU Deforestation Regulation (EUDR) will disrupt big traders’ plans to meet new demand for crops linked to deforestation. Traders of various commodities, including soybeans, coffee, and rubber, have been working for months to prepare supplies and pay premiums to farmers raising qualifying crops. The EUDR, which would have been effective at the end of the year, is expected to be postponed for another 12 months after the bloc votes on the matter. This delay is creating uncertainty for traders, including crop giant Archer-Daniels-Midland Co., who may lose sales, and farmers who have already faced low prices amid global crop supplies.

The postponement will likely shift the flow of grains and oilseeds cargoes, as scrutiny eases and lower-cost suppliers like Brazil are favored over countries like the US. Importers in the EU could back out of pricier cargoes of deforestation-free coffee or soybeans and instead choose cheaper shipments without the necessary certifications. Prices for coffee have dropped almost 9% from a 13-year high on Sept. 26, and soybean meal futures have fallen for six straight sessions, losing more than 7%.

The stakes are high when developing a market based on policy, no matter the commodity, as risk can create winners and losers in the blink of an eye and have far-reaching implications. Coffee traders have been paying 3 to 5 cents above futures in New York to meet the EU rules, but now believe appetite for those contracts is likely to decline, leading to a significant drop in premiums or disappearance until next year.

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