Coffee Surges to Seven-Year Highs

With more crop-destroying cold temperatures heading to Brazil, the world's top grower, Arabica coffee futures are hitting fresh highs and extending a dramatic rally.

Prices for the high-end beans favoured by Starbucks and other café chains have surged more than 30 percent in a week, and will eventually top US$3 a pound, according to Judy Ganes, a consultant with decades of experience in the industry. The last time prices topped $3 was in 2011.

Trees in Brazil were weakened by drought and then pummelled by two frosts in less than a month, resulting in sky-high prices.

According to an Ecom Research report seen by Bloomberg, freezing temperatures last week especially hurt young trees, which will need to be trimmed or replanted. That could affect output for years to come, including slashing next year's harvest by as much as 5.2 million bags.

Other major growers are going to reap less coffee than expected, too, like Indonesia, which is also seeing a light crop.