Frost forecast in Brazil unnerves coffee drinkers
Brazil, the world's biggest coffee grower, is facing the risk of frost after hail this month, raising the prospect of a 40 percent jump in bean costs after Kraft Foods Inc. and J.M. Smucker Co. already increased prices.
The chance of frost in Brazil increased with the weakening of La Nina, a cooling of waters in the Pacific Ocean, Brazil's Somar Meteorologia said this week. Frost in 1994 damaged 35 percent of the crop by 1997, sending prices up 39 percent that year, according to Somar. Should cold weather damage trees this year, coffee may rise to a record $4.20 a pound, the median in a Bloomberg survey of 11 analysts, traders and investors.
Arabica beans have jumped 25 percent this year on signs demand is outpacing supply. The shortage will be 6.2 million bags in the crop year starting in October, according to Rabobank International. Kraft, maker of Maxwell House coffee, raised prices three times last year.
"There is no room for disruption," said Rodrigo Costa, vice-president of institutional sales at Newedge USA LLC in New York, who correctly forecast a year ago that coffee would climb. "If Brazil has a frost, not only will we see uncharted prices but the situation might become unbearable."
Kraft, based in Northfield, Ill., increased U.S. prices on Maxwell House and Yuban ground coffees by about 22 percent on March 16, spokeswoman Bridget MacConnell said. Orrville, Ohio-based Smucker, maker of Folgers coffee, raised them by 10 percent in February, Vincent Byrd, director and president of U.S. retail coffee, said.
Arabica coffee, preferred by coffee shops such as Starbucks Corp., climbed as rains associated with La Nina damaged crops in Colombia, the fourth largest producer last year, according to the U.S. Department of Agriculture. Brazil's crop will be 13 percent smaller than last year, Brazil's Agriculture Ministry estimates.
Cold weather from the South Pole is due in the Center South in the week of May 9 and temperatures are forecast to fall to about 5 degrees Celsius (41 degrees Fahrenheit), Santos said. Coffee trees can be damaged if temperatures fall below 1 degree Celsius, he said.
Frost in Brazilian growing regions can damage trees bearing the following year's crop. "Even without weather disruptions there will be a deficit," Newedge's Costa said.
There was hail this month in some Brazil growing regions, and the damage was estimated at 50,000 to 60,000 bags, according to Somar. Brazil produced 55.5 million bags last year, according to the USDA. This year's crop is estimated at between 41.9 million bags to 44.7 million bags by Brazil's Agriculture Ministry.
Stockpiles in producing countries have been falling since 2003, when inventories were at 52.7 million bags, data from the London-based International Coffee Organization show. The 13 million bags in storage now represent 1 1⁄2 months of global exports, the lowest in at least half a century, according to Jose Sette, the ICO's executive director.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- LaBar: Is Brock Lesnar leaving WWE again?
- Rossi: Fitting in will be Kang’s biggest hurdle
- Link to Sept. 11 motivated new chief of nonprofit Friends of Flight 93
- McCandless site set for Wal-Mart supercenter store
- Power play shines in Penguins’ home victory over Blue Jackets
- Musky program achieves new standards
- Pirates starting pitcher Worley is in right place, right time with team
- Shale drilling boom a bust for some Western Pennsylvania towns
- Lawmakers press Veterans Affairs for improved access to rural health care
- Natural gas royalties lawsuit hinges on transaction date
- Deadly bacteria release spurs concern at Louisiana lab