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Brazil's Frost Fails to Bolster Coffee as Weather Concerns Ebb

Brazil's Frost Fails to Bolster Coffee as Weather Concerns Ebb

(Bloomberg) -- Brazil, the world’s top coffee producer and exporter, faced some of the coldest weather in six years in major arabica-bean areas, and the weekend frost failed to prop up the futures market after an initial rally.

The most-intense polar air mass since 2013 brought frost to most of the coffee lowlands and affected sugar-cane plantations in the southern region of Mato Grosso do Sul and Sao Paulo state. The areas produce premium arabica beans preferred by Starbucks Corp.

Farmers and agronomists said on Sunday they expect damage to coffee crops, though no immediate estimates were available. Arabica futures fell to a one-week low on speculation that frost damage won’t be severe. At around 7:40 a.m. New York time, the price plunged as much as 5.2% after opening overnight with a gain of as much as 3.2%.

Brazil's Frost Fails to Bolster Coffee as Weather Concerns Ebb

“While frost occurred in many states, it was probably limited to areas where there is a little coffee planted,” Nelson Salvaterra, a broker at Rio de Janeiro-based Coffee New Selection, said in a text message. “It probably reached mostly the leaves, which can partially recover for the next harvest.”

Arabica coffee for September delivery fell 3.7% to $1.07 a pound at 11:23 a.m. on ICE Futures U.S. in New York. Earlier, the price touched $1.053, the lowest for a most-active contract since June 25.

On May 7, futures touched 87.6 cents, the lowest since 2005, amid ample global supplies, led by Brazil. On July 5, coffee reached $1.1565, the highest since November, partly on the frost forecasts.

‘Minimal’

Commodity Weather Group in Bethesda, Maryland, cited “minor leaf burn but minimal permanent damage” from the cold snap over 25% of the coffee belt.

Initial impressions indicated frost affected 5% to 10% of the arabica crop with serious damage, said Regis Ricco Alves, a director at consulting company RR Consultoria Rural in Alfenas, Minas Gerais. An additional 10% probably had moderate damage, he said.

“It’s still too early to make a proper analysis and assessment of the full extent of the damage, ” Hernando de La Roche, senior vice president of trading for INTL FCStone in Miami, said in a telephone interview.

Rodrigo Freitas, a grower in the Mogiana region in Sao Paulo, said Monday that frost damage may affect 60 hectares (148 acres) on his farm.

“I still can’t affirm how severe it was, while certainly there will be productivity loss,” he said.

--With assistance from Shruti Date Singh.

To contact the reporter on this story: Fabiana Batista in Sao Paulo at fbatista6@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Patrick McKiernan, Millie Munshi

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