Prices leapt by more than dollars 900 a tonne at the opening of trade, the biggest one-day movement on record, said GNI, a commodity brokerage. At dollars 4,000 a tonne, the price was the highest for more than eight years before falling back to dollars 3,760 a tonne in late afternoon trading.
Retail coffee prices will increase significantly. A spokesman for Nestle, maker of Nescafe, said: 'Clearly this set of conditions will work its way through to the supermarkets. But the volatility makes it difficult to say by how much and when.' Industry analysts suggested that high-street prices could leap by 20 per cent in September.
The latest frost damage to coffee plants is the second of the Brazilian winter. Analysts said the surge in prices reflected fears that further attacks could occur because the winter can last until August. Brazil is the world's largest coffee- producing nation.
As a result of frost damage last month, the Brazilian government last week lowered its preliminary estimate for the 1995-96 coffee crop to 17 million bags, down from 22 million this year.
As much as half of the new crop may be damaged and Brazilian farmers described the impact of the frost as catastrophic.Reuse content