Brazil, a big coffee producer, suffered a severe drought. Coffee bean production fell sharply in 2017 and prices soared.

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The recent severe drought in Brazil, the world's major coffee producer, led to a decline in production, and hedge funds took advantage of the opportunity to buy futures, stimulating a sharp rise in coffee bean prices, which soared by 10% on February 18 to a 13-month high. As the rainfall in Brazil's production areas is expected to remain low for some time in the future, coffee retailers and coffee shops are facing pressure to increase prices. Analysts expect retail coffee prices to rise in the coming weeks, and consumers are bound to be more expensive.

Brazil's recent drought, last month recorded the hottest month on record, although the end of last weekend ushered in a rare rainfall, but less rainfall. A US weather consultancy says rainfall in Brazil's coffee-producing areas is expected to be below average in the coming weeks, putting pressure on production. The largest local farmers' organization estimates that the production of high-quality Arabica coffee beans may plummet by as much as 30%.

As coffee production is expected to continue to fall, hedge funds have rushed to speculate on coffee prices, causing May coffee futures to hit a high of 1.5665 a pound since January last year and are up 40 per cent so far this year.

Huck, an analyst at Macquarie in London, said investors had been bearish on the outlook for coffee beans, tended to short positions in the past two years and began to be bullish at the end of last year. As the price of coffee beans has been on the low side for a long time, the industry lacks the desire to invest, resulting in a reduction in overall production. Coffee production in Brazil between 2014 and 2015 will be the first two-year decline since 1977, according to estimates by the International Coffee Organization. Together with the recent weather factors, investors have completely changed the outlook for coffee beans.

In addition to coffee beans, Brazil is also the world's largest producer of raw sugar. Raw sugar futures were also pushed higher, with May sugar rising 3.2% the day before yesterday to 16.5 cents per pound, rebounding sharply from a 43-month low on the 28th of last month and up 12% so far.