Java just jumped at the cash register again. Due in part to a shortage of arabica beans, prices for major shelf-coffee brands such as Folgers, Dunkin' Donuts and Millstone -- all owned by J.M. Smucker Co. -- increased an average of 9% this week, Reuters reported. That's on top of a 4% bump in May. Kraft-owned Maxwell House is likely to follow.
If the soaring cost of a cup isn't making you jittery, coffee derivatives might give you a caffeine-style start. Speculators betting on rising prices are pouring into the market like milk into a double latte. Two commodity vehicles, InterncontinentalExchange and the London International Financial Futures Exchange, reported record or near-record levels of coffee futures trading. The trend has been percolating for a while. Between June 9 and 16 alone, coffee future prices soared 18.3%, according to Bloomberg data reported in Minyanville.com.
Why we are shelling out more for our daily grind traces back to Economics 101: supply and demand. A poor harvest in Central America and Vietnam has cut our supply by 8 percent, MarketWatch said. As for demand, we're jones-ing for our joe more than ever. Young adults, the fastest-growing segment, now slurp 3.2 cups per day, a National Coffee Association Study found.
All of the statistics wouldn't amount to a hill of beans except for the fact that coffee is eating into Americans' food budget at an eye-opening rate. At last check online, the price for a 33.9-ounce can of Folgers Ground Coffee Classic at Walgreens was $9.99. That was probably before the price-hike announcement.
J.M. Smucker raises coffee prices by 9% -- more java makers soon to follow