Arabica coffee prices are up 30% in the last few weeks to their highest in almost seven years, as a severe cold front threatens to damage crops in Brazil, the world's largest coffee producer.
Severe frosts in mid-February damaged around 11% of Brazil’s total arabica crop area. This of course comes upon the drought damage reported extensively in STiR coffee and tea magazine last August which effected another 15% of the arabica crop.
Coffee trees are extremely sensitive to frost, which can cause severe damage and even kill trees completely. If a farm needs to replant trees, production would take around three years.
"This marks the first time since 1994 that the country has experienced such a weather event," coffee trader I & M Smith said in a market update, referring to the July 20 harsh frosts as reported by Reuters.
"The extent of the damage is still unclear, however estimates are now between 5.5 million and 9 million (60 kg) bags, up from 2 million to 3 million last week," said Charles Sargeant, softs and agricultural commodity broker at Britannia Global Markets.
There have been drought and weather related shortfalls in key coffee producing areas this year as already reported in STiR coffee and tea, see previous stories in STiR on Colombia, Nicaragua, Indonesia, and Vietnam.