Brazil’s thirst for good coffee adds pressure to prices

Brazil’s thirst for good coffee adds pressure to prices ; Brazilian computer programmer Marcio Carneiro has spent about $4,000 in the last two years selecting just the right equipment to feed his passion: coffee. To at least some of his countrymen, the object of his affection is so culturally ingrained it doesn’t merit more than a passing thought and a quick trip a corner store.

But Carneiro and other coffee enthusiasts are a big part of what is putting smiles on the faces of Brazilian coffee growers, who are already enjoying coffee prices at multi-year highs. A surge in domestic demand, which is keeping more of Brazil’s export-grade beans at home, may drive coffee prices even higher.

“We will likely see new highs until the third quarter of this year,” said Rodrigo Costa, an analyst at brokerage Newedge in New York.

Coffee futures /quotes/comstock/21c!f2:kc\h11 (CC11H 255.20, +1.60, +0.63%) have gained 82% since January 2010. The rally in prices adds to worldwide concerns about inflation, rising food prices, and even a repeat of riots seen in 2008 amid a global food crisis.

In the U.S., several food conglomerates and coffee roasters have announced price increases, and on Tuesday J. M. Smucker Co. /quotes/comstock/13*!sjm/quotes/nls/sjm (SJM 62.32, -0.21, -0.34%) , the maker of Folgers coffee and the owner of the Dunkin Donuts brand, announced a price hike for the third time in less than year.

The benchmark Arabica coffee for March delivery on Tuesday fell 2.15 cents to $2.476 a pound on the ICE Futures exchange in New York. However, it posted a string of 13-year highs earlier this year, most recently on Thursday, when it settled at $2.51 a pound. At the start of 2010, the benchmark future trading around $1.42 a pound.