Coffee prices have reached a 12-year high.Caffeine junkies, beware: coffee is about to get a bit more expensive.

The price hike on this age-old commodity is the result of coffee prices hitting a 12-year high this week. The price of high-quality Arabica, the most popular bean variety used for making espresso and other coffee drinks, is up 1.9 percent to $1.8865 a pound for December delivery. This is the highest it's been since September 1997.

As a result, coffee chains such as Dunkin Donuts and coffee retailers, including Kraft, have had to raise prices. Dunkin Donuts has stated that a 9 percent increase will be effective immediately, while Kraft's popular Maxwell House brand has become slightly more expensive.

"At present, the New York futures market is heavily dominated by non-commercials, who are attracted by the bullish story behind Arabicas and the declining ICE stocks," Kona Haque, agricultural commodities analyst at Macquarie, told the Financial Times.

A disappointing harvest last year in Central and South America, along with the anticipated impact of the weather phenomenon known as La Niña in Brazil - the world's largest coffee grower - could be responsible for the change.

"With prices likely to start anticipating Brazil's 2011-12 'off' year within a few months, and with the stock cover situation much less than comfortable, prices are likely to remain supported for a while still," Haque added.

Coffee, which grows in 65 countries, all located between the Tropics of Capricorn and Cancer, is the second-most traded commodity in the world. Oil is the first.
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