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Maxwell House coffee just got 10% more expensive

Three-year-old coffee trees are irrigated in a farm in Santo Antonio do Jardim February 7, 2014. In Brazil's coffee belt, frost has long been the biggest risk for farmers and commodities traders alike. But after years of migration to warmer confines, farmers here now find themselves scrambling to overcome a unusual threat: blistering heat. January was the hottest and driest month on record in much of southeastern Brazil, punishing crops in the country's agricultural heartland and sending commodities prices sharply higher in global markets.
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The world’s largest coffee crop needs a lot of water.Reuters/Paulo Whitaker

Kraft Foods just raised the price of Maxwell House and another coffee brand, Yuban, by about 10%, the company told The Wall Street Journal (paywall).

Drought in the world’s biggest supplier, Brazil, has pushed the price of futures in Arabica beans up more than 50% this year. Last week, the owner of Folgers raised its coffee prices by almost as much. Folgers is the biggest seller of coffee by volume in the US, with Maxwell House in second place, according to Bloomberg.

Starbucks has already locked in its coffee supply for the current fiscal year, and is waiting to see if the price falls. The world’s growing thirst for pour-overs and frappuccinos means that coffee is giving higher returns than most traditional investments. If the supply from Brazil, which supplies a third of the world’s coffee, doesn’t improve soon, this probably won’t be the last price hike this year.

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