Tropical storm Matthew hits Nicaragua, Honduras

Tropical Storm Matthew hit Honduras and Nicaragua on Friday, forcing hundreds of residents and tourists to evacuate and threatening damage to Central America's coffee and sugar crops.

Rains soaked Honduras' isolated Mosquitia coast, only accessible by boat or plane, where poor indigenous groups live in precarious wood houses on riverbanks or near the sea. Many people left their homes to wait out the storm in temporary shelters.

"I'm stocking up on food because they say the storm will cause serious damage. Later on we won't be able to leave the house, or there won't be any goods in the stores," Zoila Solorzano said at a shop in the Honduran capital, Tegucigalpa.

Matthew, with winds of 45 mph (75 kph), moved inland over Nicaragua''s Atlantic coast near the border with Honduras and is set to bring six to 10 inches (15 to 25 cm) of rain over the weekend.

This year's active hurricane season has already battered the region, knocking out roads and bridges. More rain from Matthew could delay coffee and sugar harvests in the next couple of months. Cane fields have been flooded and coffee trees risk disease and fungus from too much moisture.

In 1998, Hurricane Mitch tore through Central America killing more than 11,000 people in devastating floods. It was the second most deadly storm on record.

Matthew, the 13th named storm of the 2010 Atlantic season, is not forecast to become a hurricane but could cause life threatening mudslides after the ground is soaked for days.

"Torrential rains will be the biggest threat for the next few days," the Miami-based center said in a statement.

More than 260 people have died in Guatemala so far this year in mudslides and flash floods.

Seven indigenous communities near Nicaragua's coast were moved to towns inland and 375 people were evacuated from Nicaragua's outlying Miskito Cays. Dozens of tourists on Honduras' resort island of Roatan began leaving on Thursday.

Matthew is to shift north toward Guatemala and Mexico's Yucatan Peninsula and lose force before reaching the Gulf of Mexico, where most of Mexico's oil wells are located. Mexico is still recovering from Hurricane Karl, which hit the Gulf last weekend.

The small economies of Guatemala, Nicaragua and Honduras depend heavily on agricultural exports like coffee and sugar. Coffee market players said Matthew had so far not affected prices since crop damage was not expected to be too severe.

Sugar losses could be more serious. Guatemala and Honduras both cut their sugar harvest forecasts by around 5% because of the rains.

"We still have cane fields that are flooded. There will definitely be more losses," said Carlos Melara, the head of Honduras' sugar association. Central America produced 4.43 million tonnes of sugar in the 200910 harvest and was hoping for a larger crop this year.

Matthew's rains, if they last for days, could start affecting coffee however, said exporters and producers.

"If it carries on raining like it has been raining, we're going to have problems in terms of leaf disease and beans dropping because we're getting closer and closer to harvest time," said a Guatemalan coffee exporter.

Nicaragua had to slash its coffee production estimate for the 2010-2011 season due to the bad weather, and infrastructure damage in Honduras and Guatemala - the region's top two coffee producers - has slowed some exports.

At the other end of the Atlantic, Tropical Storm Lisa was upgraded to a hurricane with maximum sustained winds of 75 miles per hour (120 kph), about 385 miles (615 km) northwest of the Cape Verde Islands, but posed no threat to land or oil assets. Lisa is the seventh hurricane of the season.