Speculators jack up price of coffee beans

Get ready to spend more for your morning pick-me-up.

Coffee prices are on the march, and the costs of the milk, sugar and even paper cups are climbing. But whereas other commodities like copper or oil have been pushed up by demand from developing countries, coffee is a different case. Demand has only edged up, and much of the recent surge can be attributed to speculators hopping into the commodity.

Oren's Daily Roast, a boutique coffee store in New York City, has charged $2.95 for a medium latte for the past two years. Now, owner Oren Bloostein is considering a price increase of perhaps 3 percent for a cup of coffee and up to 10 percent for coffee beans.

"It is very disconcerting," Bloostein said. But after an 11 percent increase in ingredients since the beginning of this year, he said, "I need to raise my prices so that I can remain in business."

The price pressures on a cup of joe began building in 2007. The price of the coffee itself rose 7.7 percent last year, while milk climbed 24 percent.

Now, spurred by tight supplies of coffee beans and investors looking for the next commodity run-up, prices are boiling over. The price of green coffee beans has risen 22 percent since the beginning of the year.

Faced with higher costs for acquiring coffee beans, major U.S roasters Procter & Gamble Co. and Kraft Foods Inc. last month increased prices on ground and instant brands, including Maxwell House and Folgers. It was the second price increase in four months.