While consumers may not immediately see the effect in supermarkets andcoffee bars, futures prices spiked for a second consecutive day at theCoffee, Sugar & Cocoa Exchange, leaving prices up 30% so far this week.Nearby September-delivery futures rose 18 cents to $1.1905 a pound at CSCE,a division of the New York Board of Trade. The run-up came on the heels of a9.7-cent increase Monday as frost worries began to spread.

Tuesday's report by the Brazilian agricultural ministry covered the nation'sParana region, where the government said chilly weather could slash the2000-2001 coffee crop by 20% and the 2001-2002 crop by a staggering 90%.

Still unclear is the amount of damage expected in Minas Gerais, the largestgrowing region in Brazil, which produces one-third of the world's coffee.

Analysts said any significant decrease in production there could send pricesup another 25 cents or more - a price level that would have to be sustainedfor some time before consumers see it at local supermarkets.

"The producers have been talking about retaining part of the coffee crop forsome time now" to drive up prices, said Mike MacDougall, an analyst at FimatUSA Inc. who is visiting Sao Paulo, Brazil, this week speaking to industryinsiders. "Instead, Mother Nature is doing it for them." Tuesday's increaseleft coffee futures at a six-month high, although the bean's futures priceis still down 5.4%, or 6.85 cents, for the year to date. But cold Brazilianweather hasn't caused such a spike in the market since at least 1994, saidanalyst Ann Prendergast of Refco Inc.

Recently, prices for coffee and other tropical commodities, particularlycocoa, have been severely depressed because of an oversupply. And withgovernment subsidies supporting unprofitable production in many countriesand a long maturation for new plants making it difficult for growers toplan, analysts have seen little hope of easing that excess.

-- (The Wall Street Journal)