May 17 (Bloomberg) -- Arabica coffee futures in Tokyo fell 3.9 percent, the biggest fluctuation of any commodity market today, on reduced concern about frost damage in Brazil that had sent prices to a six-year high in March.

Brazil ships 47 percent of the global trade in coffee and is the biggest supplier of the milder-tasting Arabica variety. Yesterday U.S. weather forecaster Meteorlogix said no cold weather is expected in Brazil this week.

Coffee prices in Japan, the world's third-biggest importer of the beans, have surged 39 percent in the past six months partly on concern any frost would worsen a global shortage.

``There is no immediate indication there will be any frost,'' said Hiroyuki Kikukawa, deputy general manager of research at Tokyo-based Nihon Unicom Corp. The price increase already reflects the frost risk and ``at this level buyers are reluctant to buy more.''

Arabica coffee for delivery in March 2006 ended trading down 800 yen at 19,530 yen per 69-kilogram bag ($1.20 a pound) on the Tokyo Grain Exchange. Today's decline was the maximum allowed by the exchange.

Prices closed at 24,500 yen on March 18, the highest since the futures began trading in November 1998. Arabica is the variety favored by specialty roasters such as Seattle-based Starbucks Corp. and Tokyo-based Doutor Coffee Co.

Japan has about 90,000 coffee and tea shops that sell $9.9 billion worth of beverages a year. The exchange in Tokyo holds five daily sessions for Arabica coffee futures where buy and sell orders are matched through an auction.

New York Beans

Today's decline follows a 4.3 percent drop yesterday in Arabica prices on the New York Board of Trade, the world's biggest coffee futures exchange.

Arabica for delivery in July fell 5.25 cents to a one-month low of $1.1625 a pound in New York, paring their 12-month gain to 70 percent. The futures reached $1.381 a pound on March 10, the highest since December 1999.

Brazil's main coffee harvest gets under way in the next month. A freeze that damaged Brazilian coffee trees in 2000 caused Tokyo coffee prices to surge 33 percent in nine days.

Colder weather later this week in southern Brazil ``will not pose a significant threat to coffee production areas,'' World Weather Inc., a forecaster in Overland Park, Kansas, said yesterday.

The biggest movers are screened for the size of the market and amount of daily trading. A futures contract is an obligation to buy or sell a commodity at a set price by a specific date.

To contact the reporter on this story: Julie Tay in Tokyo at jtay1@bloomberg.net; Jason Gale in Singapore j.gale@bloomberg.net

Last Updated: May 17, 2005 03:23 EDT