The prices of Folgers and Maxwell House coffees have already been creeping up, but now the companies face a possible 40% spike in bean costs as Brazil deals with hail and possible frost, Bloomberg reports.

The industry has seen Brazilian frost wreak havoc on prices before. In 1994, a frost damaged coffee crops and prices rose 39%. If the same thing happens this year, coffee could hit a record $4.20 a pound, according to Bloomberg. And if coffee is that high at the wholesale level, just imagine what it will cost on store shelves.

As if that weren't bad enough, there's already a shortage this year of Arabica beans, causing prices to increase 24%. "If Brazil has a frost, not only will we see uncharted prices but the situation might become unbearable," industry analyst Rodrigo Costa told Bloomberg.

Kraft Foods (KFT) hiked the price of Maxwell House and Yuban by 22% last month. JM Smucker (SJM) upped prices for Folgers by 10% in February.

For now, the industry is watching the weather in Brazil intently, particularly the Center South region that produces the Arabica beans favored by Starbucks (SBUX) and other brewers. Cold weather from the South Pole is due in that region next month, Bloomberg reports, and the temperature is expected to fall to 41 degrees. Coffee trees are in danger below 34 degrees.

Starbucks chief executive Howard Schultz is confident his company will have no coffee supply problem. Coffee suppliers say everything is fine, he told CNBC. The problem is that hedge funds and other speculators are pushing prices sky high.

"So we're living at a time right now where financial speculation index funds, hedge funds have created a rush of very, very high prices," Schultz said. "And not only coffee, corn, sugar, cotton and obviously oil, and unfortunately it has to hit the consumer."

Schultz added that he doesn't see much elasticity on coffee pricing. With the economic downturn, he said, the industry must be very conscious about prices.

Starbucks reported a 20% increase in quarterly profit Wednesday to $261.6 million, or 34 cents a share, meeting analyst expectations. Revenue rose 10% to $2.8 billion, which exceeded analyst expectations.