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Brazil’s Sao Paulo, Parana Areas Are Prone to Frost Tomorrow

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May 1 (Bloomberg) -- Some areas in the states of Sao Paulo and Parana in Brazil, the world’s largest producer of sugar and coffee, will be prone to frosts at dawn tomorrow, according to the government’s Meteorology Institute, known as Inmet.

Weather conditions are favorable to frosts in the Serra da Mantiqueira region of Sao Paulo and the southern part of Parana, Inmet said in two separate weather alerts on its website today. Sao Paulo is Brazil’s second-biggest arabica coffee-producing state, according to Conab, the government’s crop forecaster.

Frost in Brazilian growing regions can damage coffee trees bearing the following year’s crop. Arabica coffee for July delivery climbed 2.6 percent to $1.8415 a pound on ICE Futures U.S. in New York.

“Any alert for frost or colder temperatures is a wake-up call for those who are short to cover a portion of their positions,” Rodrigo Costa, a director at Caturra Coffee Corp., a dealer in White Plains, New York, said by e-mail today. A short position is a bet on lower prices, and covering would involve buying back the contract.

Money managers were net-short, or betting on lower prices, in New York coffee by 12,064 futures and options as of April 24, according to U.S. Commodity Futures Trading Commission data. They were net-long as of Feb. 20, the data show.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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