By Ryan Dezember

Arabica coffee futures are trading at new highs, pushing past a record set in April 1977.

Futures prices for the high-end beans used in cafes have nearly doubled over the past year and have jumped 40% since October over worries for the Brazilian crop.

Coffee brewers often trade down to robusta beans when arabica prices rise. But the lower-grade beans hit their own record price last month thanks to drought in Vietnam's growing season and heavy rains now that are hampering the harvest.

The gains threaten to make your morning cup of joe more expensive whether you brew it at home or grab it to go. Big coffee producers have already raised prices this year and executives have told investors that they are trying to figure out how much higher they can lift them without turning away customers.

Coffee is the latest of the so-called soft commodities to surge in price due to poor crops.

Prices for cocoa, the key ingredient of chocolate, skyrocketed this spring when the dry Harmattan winds foiled West African growers working with trees well-past their productive primes. Orange juice futures have nearly quadrupled over the past three years as citrus greening disease has laid waste to Florida's groves.

The situation with coffee may not be quite as dire.

Though Brazil has produced three weak crops in a row, the recent surge in futures prices is a bet on the next harvest. As with cocoa and orange juice, analysts and big bean buyers say that speculators piling into bullish trades have helped fuel price increases.

"The market for coffee today is very speculative because we haven't hit harvest season yet," said Mark Smucker, chief executive J.M. Smucker, which sells the Dunkin', Folgers and Cafe Bustelo brands.

"A lot of the volatility we're seeing is really related to financial speculation," Smucker told investors late last month. "We would hope that we would get a bit of relief assuming we have a good crop."

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(END) Dow Jones Newswires

December 10, 2024 09:39 ET (14:39 GMT)

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