Coffee Jumps Most in Five Weeks as Market Eyes Brazil Frost Risk
Arabica prices jumped in New York after mild frost in parts of top producer Brazil added to supply concerns, with traders assessing another cold snap expected in the South American nation this week.
The most-active contract rose as much as 7%, the most since July 9. Pockets of frost occurred in southern Brazil over the weekend, but temperatures didn’t decline enough to damage sugarcane, coffee or small grain crops, according to Michael McDougall, managing director at Paragon Global Markets.
Cold weather is seen hitting the southern states of Rio Grande do Sul, Santa Catarina and Paraná again this week. While that appears to pose little risk to coffee growing areas, market volatility has traders watching the weather carefully to assess risks and potential damage.
“The minimal frost occurrence in parts of Cerrado/High Mogiana was enough to spark new fears of supply,” said Thiago Cazarini, president of Cazarini Trading Co. “We are already in an environment that can see no errors in production.”
Frost would add to crop stress caused by dry weather in Brazil that’s already threatening to hurt next year’s output. Also, any rain ahead of the frost could trigger premature flowering that may not survive if there are no follow-on showers, according to Judith Ganes, president of New York-based J. Ganes Consulting
“That would be a strike against the Brazilian 2025/26 crop potential,” she said in a research note.
