Last night frost was reported in Sul de Minas, the largest production area in Brazil. The extent of damage is not yet known, but the fact is that there WAS frost and that it occurred in one of the largest production areas. As one analyst friend put it succinctly to me, the reports on the ground come in 3 camps: "no damage", "some" and "loads". I'm going to provide my analysis on the damage below, but I want to start by saying, it is not the markets job to price the damage in right now, it is the market's job to price in RISK.
The risk is this: we have a significant deficit in 21/22 already, the market is counting on 22/23 to recover the deficit, if the frost has damaged that capacity significantly then the market will have to price ration coffee. That is the risk and the reason why I have titled this "Worst-Case Coffee Frost".