Coffee Shortage Percolating

A smaller coffee crop in Brazil could lead to a worldwide shortage in 2009-2010, Bloomberg reports. And the news is already affecting prices: Arabica beans, the kind used by Starbucks, jumped yesterday after a Brazilian official warned of a 22% drop in output. Other countries can't make up for "such a big fall of up to 10 million bags from Brazil," a trade group rep said.

Two factors are expected to contribute to the shortage, which would come on the heels of a surplus this year. Coffee trees in Brazil, the world's largest producer, are on a two-year growing cycle, and the slow half of that cycle is coming up. Another issue is the high price of fertilizer. Other top growers are Vietnam and Colombia.