(Bloomberg) -- Arabica coffee futures swung after hitting a fresh high Monday as trade tensions spooked a global market already facing tight supplies.

The most-active contract in New York gained as much as 2.3% to a record $3.5555 a pound, before fluctuating between gains and losses. The spike came as a short-lived US tariff threat against Colombia added to trade uncertainties. It also followed fresh records over the past two sessions, bringing the relative strength index into overbought territory, indicating prices may have risen too far, too fast.

US President Donald Trump over the weekend ordered his administration to impose tariffs and sanctions on Colombia for refusing to allow two military planes carrying deported migrants to land. Soon after, the White House said he would hold off on imposing those measures after reaching a deal on the return of those deported.

The move rattled the outlook for coffee shipments at a time when most-active futures for the arabica variety have surged amid harvest shortfalls in major growers. Colombia is the world’s third-largest coffee producer and second-largest for the arabica variety favored for specialty brews. With at least 40% of its coffee exports heading to the US, it is the South American nation’s biggest market, US Department of Agriculture data show.

“In reality, all Latam coffee producers are likely to face the same threat as Colombia and all are likely to back down,” said Steve Pollard, an analyst at Marex Group. “If import tariffs are applied to coffee from all these origins, the impact is likely to be on retail prices in the US.”

If the tariffs were applied to Colombia, the physical market would be disrupted by prompting diversion of the country’s premium beans to Europe, raising US demand for other origins, Pollard added. The futures market would be less exposed, as prices are tied to coffee stockpiles mainly in Europe, he said.

Still, lackluster crops in major growers, including Brazil and Vietnam, have already strained coffee supplies, with the USDA projecting global ending stockpiles in the 2024-25 season to fall to a 25-year low. Futures in New York are up more than 80% from a year ago.

--With assistance from Ilena Peng.

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