Coffee prices surge 25% after killer frost in Brazil

June 28, 1994|By New York Times News Service

NEW YORK -- Coffee prices surged more than 25 percent yesterday, the largest one-day rise in more than seven years, as a damaging frost struck much of the coffee-growing areas of Brazil.

"We are going to see this market skyrocket," said Judith Ganes, coffee analyst for Merrill Lynch. "Consumers are likely to feel it at the retail level."

Coffee for July delivery jumped 33.8 cents, to $1.5975 a pound -- after peaking earlier at $1.80 -- its highest price since November 1986.

Procter & Gamble, which produces Folgers coffee, took immediate action affecting prices on supermarket shelves. The big coffee roaster, which sells in 13-, 26- and 39-ounce cans and bags, said it would raise the price of Folgers by 40 cents for every 13 ounces, effective last night.

"We're going to be watching the market very closely in the next several days to see whether there are any further implications for coffee prices," Wendy Jacques, a spokeswoman, said.

Nan Redmond of General Foods, which produces Maxwell House coffee, said only that "we are certainly monitoring the situation closely."

William Callas, vice president of Coffee Associates, an importer and distributor based in Edgewater, N.J., noted that "it's been a volatile market for the last couple of months."

"Consumer prices will continue to go up as the price of green coffee continues to go up," Mr. Callas added.

Coffee-futures prices have risen 73 percent since May amid declining supplies, increased consumption and smaller than expected harvests in Brazil and Colombia. Brazil is the world's biggest coffee producer, accounting for about 25 percent of the world harvest. Crop losses there from frost, now estimated at 15 percent, are expected to tighten global output -- already relatively scarce because of bad weather elsewhere -- and reduce worldwide supplies by about 4 percent.

"There was a cold frost from Saturday night to early Sunday morning," said Howard Schmidt, a meteorologist for Accu-Weather Inc. "It won't affect the harvest now, but it will cut the 1995-96 crop."

Coffee beans take years to mature, so next year's Brazilian crop will be most affected by the frost. Accu-Weather said the temperature was as low as 29 degrees Saturday night, when a mass of cold air moved north from Antarctica.

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