Coffee prices on the rise

|By:, SA News Editor

Coffee prices could be driven higher later this year due to high demand for premium beans and a tight supply as a result of a harsh drought in Brazil.

The International Coffee Organization forecasts H1 coffee production will be down close to 5%.

The wildcard: An early outbreak of El Nino could also disrupt crops across South America.

What to watch: Starbucks (SBUX), Tim Hortons (THI), McDonald's (MCD), and Keurig Green Mountain (GMCR) could get pinched if coffee prices push significantly higher. Analysts note not all of the input costs can be passed off to consumers and hedging strategies weaken above a price level of $3/pound.

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