The frost scare in Brazil, which fuelled a rise in arabica coffee prices to a one-year high, was overdone, Rabobank said.
“We believe that if there was any frost damage at all, it is confined to some regions of Sao Paulo, and possibly in some valleys and corridors in the south of Minas and Parana that are known to be prone to frost,” the bank said.
“From what we hear, the frost should not have reached more than 2-3% of all arabica trees.”
However, the bank acknowledged that low temperatures remain a potential threat until early September. Until mid-August, when the prospect of any late freeze should be in the weather outlook, “we should expect any lowering of temperatures to attract fund attention”.