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Cup Of Coffee Will Soon Cost More

December 24, 1988

Undated (AP) _ Get ready to swallow an increase in coffee prices.

Poor growing and harvesting conditions have pushed prices for green, unroasted coffee beans to their highest levels in two years, and roasters say they’ll pass their higher costs along by raising prices about 30 cents a pound.

Procter & Gamble Co., the second-largest U.S. coffee roaster behind Philip Morris Cos.′ General Foods division, said Thursday that it would raise wholesale prices of its ground roasted coffees by 30 cents a pound on Jan. 23.

P&G, which produces Folger’s coffee, also plans increases of 27 cents a pound for its 11 1/2 -ounce special-roast flaked coffee and 4 cents an ounce for its instant coffees.

″All I can say is that coffee is a fluctuating market,″ said P&G spokeswoman Belinda Baxter Welsh in a telephone interview from her office in Cincinnati. ″We try very hard not to increase our prices any more than we have to, but the price of green coffee went up.″

General Foods, maker of Maxwell House coffee, said it had no one available to discuss coffee prices. But analysts said they expected other roasters to follow P&G’s lead.

The rise in green coffee prices may filter down even more quickly for those who prefer to buy freshly roasted beans from bins at gourmet coffee shops, said David Siefer, manager of the Coffee & Tea Exchange, a Chicago boutique.

Siefer said he planned to raise prices by 30 cents a pound on Dec. 26.

″It’s going to hit the gourmet end of the business a little sooner than it may be reflected in the major coffee companies,″ he said.

″We don’t have quite the capital the major companies have. They buy by the (37,500-pound) container-load, but we generally have less than 2,000 pounds on hand.″

Cash prices for green coffee from Brazil, the world’s largest producer, have soared this month as the seasonal rise in North American consumption focused attention on supply problems ranging from drought conditions in Brazil to a rain-delayed harvest in Colombia.

In just the past two weeks, the price of Brazilian coffee in the New York harbor surged to $1.45 a pound from $1.17 a pound. During the same period, coffee for March delivery on New York’s Coffee, Sugar & Cocoa Exchange, leaped from about $1.27 a pound to about $1.49 a pound.

The tight-supply picture eased somewhat late in the past week. A 10-day Brazilian dockworkers’ strike ended on Thursday and the 15-day moving average of overall coffee prices rose above $1.144 a pound, triggering a 1-million bag increase in the amount of coffee that producing countries are allowed to export under the rules of the International Coffee Organization.

But analysts say supplies of coffee remain very tight.

In early 1986, under similar conditions, green coffee futures prices rose to nearly $2.80 a pound.

″We are not up there yet but we may get up there,″ said Arthur Stevenson, a coffee-market analyst with Prudential-Bache Securities Inc. in New York. ″It depends how much further these weather conditions bite into production.″

But Stevenson said prices were unlikely to return to the levels of 1976, when coffee futures peaked above $3.30 a pound.

″That was the year of a major frost in Brazil, a major calamity,″ he said. ″The causes there were somewhat different.″

Here are some commmodity price trends for the past week:

Grain and soybean futures advanced on the Chicago Board of Trade.

Wheat for delivery in March settled Friday at $4.40 1/2 a bushel, up from $4.36 1/4 a week earlier; March corn rose to $2.84 1/4 a bushel from $2.82 3/4 ; March oats rallied to $2.37 a bushel from $2.30; and January soybeans climbed to $7.96 1/2 a bushel from $7.86 1/2 .

Livestock futures moved higher on the Chicago Mercantile Exchange but frozen pork-belly futures retreated.

February live cattle rose to 74.37 cents a pound from 72.95 cents; January feeder cattle advanced to 84.22 cents a pound from 84.17 cents; February live hogs rallied to 47.30 cents a pound from 46.67 cents; and February frozen pork bellies declined to 44.50 cents a pound from 45.07 cents.

Precious metals futures prices rose on New York’s Commodity Exchange.

February gold finished Friday at $421.60 a troy ounce, up from $417.60 a week earlier; March silver climbed to $6.275 a troy ounce from $6.205.

Energy futures advanced on the New York Mercantile Exchange.

February West Texas Intermediate crude oil moved to $16.61 a barrel from $16.05; January heating oil rose to 53.14 cents a gallon from 52.02 cents; and January unleaded gasoline rallied to 46.86 cents a gallon from 45.13 cents.

End Adv Weekend Editions Dec. 24-25

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