The Standard & Poor’s GSCI Agriculture Index of eight commodities yesterday capped a seventh straight gain, the longest streak since 2011. Rain in growing regions will be 75 percent less than normal in the next five days, deepening a moisture deficit after the driest January since 1954, David Streit, an agricultural meteorologist at Commodity Weather Group, said in a telephone interview from Bethesda, Maryland.

Prices for arabica coffee surged 40 percent in 2014 as production losses in Brazil’s top growing state may be as much as 30 percent, the biggest farmers group estimates. Forecasters including AgRural, Agroconsult and Celeres have cut their outlook for the soybean harvest. This year’s rally may boost expenses for Starbucks Corp. (SBUX), the largest coffee-shop chain, and sugar costs for Krispy Kreme Doughnuts Inc.

“Brazil is such as a powerhouse in these markets, and any sort of adverse-weather event will affect these commodities in a significant way,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “Speculators have jumped on board with this Brazilian drought.”

Arabica coffee for May delivery rose 8.8 percent to settle at $1.5485 a pound yesterday in New York on ICE Futures U.S., after surging as much as 10 percent, the biggest intraday gain since November 2004. Prices reached $1.5665, the highest for a most-active contract since January 2013.

Extreme Weather

Extreme global weather also is threatening other crops with too much rain hampering Indonesia’s cocoa harvest, while freezing temperatures may have damaged U.S. wheat. The GSCI Agriculture Index rebounded 5.6 percent this year, after a 22 percent plunge in 2013 that was the biggest since 1981.

In the past 30 days, precipitation was as little as 1 inch (2.54 centimeters) across most of Brazil’s growing regions, or 88 percent below normal, according to Commodity Weather’s Streit. Damage to coffee crops in Minas Gerais state was “more severe than imagined,” Carlos Alberto Paulino da Costa, head of Cooperativa Regional de Cafeicultores em Guaxupe Ltda, known as Cooxupe, said on Feb. 13. The company is the world’s largest coffee cooperative.

Hedge-Fund Bets

A measure of speculative positions across 11 agricultural products jumped 30 percent to the highest since late October as of Feb. 11, data from the U.S. Commodity Futures Trading Commission show. The net-long position in coffee surged 97 percent to 15,728 contracts, the highest since September 2011. Hedge funds are holding the first net-bullish position in corn since June and have increased their outlook for a soybean rally.

Parts of Mato Grosso and Parana, Brazil’s biggest producers of corn and soybeans, received less than 60 percent of normal rainfall in the past 90 days, data from World Ag Weather show. AgRural this week cut its Brazil soybean-crop forecast to 87 million metric tons from 88.8 million.

Soybean futures for May delivery gained 1.7 percent to $13.4775 a bushel yesterday on theChicago Board of Trade. Prices climbed 4.3 percent this year. Also on the CBOT, corn futures gained 1.1 percent to $4.555 a bushel, after touching $4.5575, the highest since Sept. 30.

Orange-juice futures slid 0.5 percent to $1.4365 a pound on ICE in New York. Prices are up 11 percent in the past 12 months. Brazil is the world’s biggest citrus producer.

‘Weather Game’

“It’s all a weather game,” Jerry Gidel, the chief feed analyst at Rice Dairy LLC in Chicago, said in a telephone interview. In Minas Gerais and “Sao Paulo is where you have the citrus and the coffee and the sugar, so it has been impacted by less-than-ideal weather in the last month or six weeks. It’s starting to creep into the areas of soybeans.”

Raw-sugar futures for May delivery gained 3.2 percent to 16.5 cents a pound on ICE. The sweetener has rallied 12 percent since touching a 43-month low on Jan. 28.

Also in New York, cocoa futures for May delivery fell 0.3 percent to $2,959 a ton on ICE, after reaching $2,985, the highest since September 2011. Heavy rains are threatening crops inIndonesia, the third-largest grower. World demand will outpace supplies this season and next, according to Macquarie Group Ltd.

Wheat futures for May delivery gained 1.9 percent to $6.075 a bushel in Chicago. More Texas winter grain was rated in poor or very-poor condition as of Feb. 16 than a week earlier amid cold, dry weather, the state’s Department of Agriculture said yesterday.

“These are weather markets, which can be pretty dynamic in both directions,” said Ashmead Pringle, the president of Atlanta-based GreenHaven Commodity Services, which oversees about $320 million. “Overall, we’re seeing more interest and inflows into the agricultural space.”

To contact the reporters on this story: Marvin G. Perez in New York atmperez71@bloomberg.net; Megan Durisin in New York at mdurisin1@bloomberg.net; Liyan Chen in New York at lchen335@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

http://www.bloomberg.com/news/2014-02-18/starbucks-favored-coffee-jumps-most-since-2004-on-weather.html

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