Frost could double coffee price


Thursday is crunch time for the world's coffee industry. Weather forecasters say a cold front moving into Brazil is likely to produce a rare frost that could double the price of the commodity almost overnight.

The last time frosts hit Brazil's coffee plantations, in 1994, the price soared 40% in a few minutes and doubled a fortnight later when a second frost occurred. Over the following few months the shop price of a jar of coffee rose between 15% and 20%.

'We are talking disaster,' said coffee analyst Caroline Eagles of internet service 'If the forecasts are right, this could well be worse than 1994. The sky's the limit on price. It's anyone's guess.'

Coffee future prices have already fluctuated wildly in the past week as reports of temperatures dropping below freezing point on some mornings have sent shivers through the New York and London commodity markets.

A 10% surge last Thursday was wiped out the next morning when the forecast frost did not materialise. On Tuesday, prices in London, where the robusta variety of coffee is traded, soared again by £117 to around £1,020 a tonne on the back of the latest weather report, which said Thursday is likely to be the coldest morning this week.

A light frost would burn leaf buds and could completely wipe out next year's crop of beans, but a heavier frost could hit the trunks of the coffee trees, forcing farmers to cut them back, so destroying the crop for the next three or four years. Eagles believes the total Brazilian crop could be halved.

This would have a serious impact because Brazil produces about a third of the world's annual coffee supply of 110m bags. And the frost is forecast to hit hardest in Minas Gerais, the country's biggest coffee-producing state, which accounts for about a third of the country's supply.

There are implications for the consumer. Nestlé is not saying what it will do in the event of a severe frost. 'We always look to the long term, not short-term price fluctuations,' it said.

Shop prices did eventually go up following the 1994 frost, although the stockpiles built up since then by roasters such as Nestlé and Folgers in the US may help them avoid dramatic increases this time.

Frost could double coffee price

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