Price of coffee to rise if frost falls

New York: Brazil, the world’s biggest coffee grower, is facing the risk of frost after hail this month, raising the prospect of a 40% jump in bean costs after Kraft Foods and JM Smucker already increased prices.

The chance of frost in Brazil increased with the weakening of La Nina, a cooling of waters in the Pacific Ocean, Brazil’s Somar Meteorologia said. Frost in 1994 damaged 35% of the crop by 1997, sending prices up 39% that year, according to Somar. Should cold weather damage trees this year, coffee may rise to a record $4.20 (€2.84) a pound.

Arabica beans have already jumped 24% this year on signs demand is outpacing supply. The shortage will be 6.2 million bags in the crop year starting in October, according to Rabobank. Kraft, maker of Maxwell House coffee, raised prices three times last year.