#024 - Perpetuity Over Predictions: What the Brazil Harvest Means for Your Inventory
- renatostivanin
- May 22
- 4 min read
We founded Meiero with the vision of building an institution for perpetuity - one dedicated to solving relevant problems along the coffee value chain. For us, this means avoiding existential risks and focusing on long-term partnerships. A big part of that philosophy involves tuning out financial market noise; we simply do not engage in short-term trades or market predictions.
However, because we are embedded at both ends of the spectrum - working with both coffee growers and roasters - we possess a unique perspective. Since education is a key pillar of our value proposition, we want to share what we are seeing in the market right now.
Last January, we published two letters on this topic: '#008 - The Backwardation Trap' and '#009 - The January Turning Point'. In them, we highlighted short-term supply restrictions, the inverted market curve, and the high costs of carrying coffee inventory. The situation back then was undeniably tough. Key players were facing liquidity crunches while coffee prices doubled or tripled. Many producers held out for even higher prices, while some coffee shops even started migrating to matcha (yes, sad, we know!). At the time, we emphasized how Brazil's summer rainfall could drastically shift these market dynamics.
Since then, much has changed. Coffee Futures have corrected from ~$3.70 to ~$2.80 per pound.
However, the market remains heavily inverted (in backwardation); the price difference between the front-month settlement and 6 months forward has only narrowed slightly, from -7.9% to -5.9%. This means holding physical inventory remains incredibly expensive.
On the ground, distributors and roasters continue to operate with low inventory levels. Supply chain disruptions and unfulfilled contracts are still lingering issues. Meanwhile, among producers, we are only just beginning to see smaller farmers sell off existing coffee to fund their upcoming harvest operations.
The critical inflection point is happening right now: Brazil’s harvest is underway and is expected to be very strong. Concurrently, analysts are already discussing potential El Niño climate effects for the 2026–27 cycle, which could impact the following crop and push long-dated futures curve prices higher. In other words, this imminent harvest could be the exact event the industry has been waiting for to finally normalize the market.
Frankly, we don’t know where prices will sit in six months. But right now, it does not feel like the time to aggressively rebuild inventory.
Instead, we recommend our partners stick to what they do best: producers sell, and roasters buy. Minimize unnecessary risk. As always, we are here to help you navigate it. ;)
Highlights:
Coffee Futures KC Price in NY: -3.35% weekly, closing at 284.60 cents/lb.
Coffee Price in Brazil's B3 in USD: -3.50% weekly, closing at 360.30 USD per 60kg bag.
BRL/USD fx rate: -1.49% weekly (Brazilian Real depreciated against the USD to around 0.1978 USD per BRL).
Proxy of 20' container freight prices from Santos to Rotterdam: down ~4% weekly (averaging a spot range of $1,500–$5,500 USD amid stable Atlantic lanes but high port capacity utilization).
Starbucks Corporate Layoffs: Starbucks announced its third round of corporate layoffs and the closure of regional support offices in Atlanta, Dallas, and Chicago as part of CEO Brian Niccol's "Back to Starbucks" turnaround strategy.
US Retail Coffee Prices Spike: Retail coffee prices in the U.S. hit an all-time high in April, jumping 18.5% year-over-year to an average of $9.72/lb, driven by previous global shortages and tariff anxieties.
Dutch Bros Continues M&A Streak: High-growth drive-thru chain Dutch Bros acquired its second smaller drive-thru coffee chain in just four months, targeting an aggressive footprint expansion of 2,029 shops by 2029.
Dunkin’ Re-enters Canada: Through a major master franchise agreement with Foodtastic, Dunkin' plans to open hundreds of Canadian locations starting in late 2026, marking a strategic return after exiting the market in 2018.
Corporate Divestment from Cafés: Large beverage conglomerates are pivoting away from high-overhead physical café ownership to focus purely on scalable packaged distribution networks, utilizing retail spaces more as branding flagships than core profit engines.
Vietnam Deep Processing Shift: Facing market pressures, Vietnamese coffee businesses are actively shifting strategies from exporting raw green robusta beans to high-value deep processing to capture more global margin.
Indian Coffee Exports Surge: India's coffee exports surged 27% during the first four months of 2026, driven by an increased global appetite for robusta and instant coffee blends.
Kenya Enacts New Coffee Act: The Kenyan government enacted the Coffee Act of 2026, restructuring regulatory oversight back to a re-established Coffee Board of Kenya to manage a forecasted 12% output bump.
Thai Coffee Giants Face Off: PunThai Coffee rapidly expanded its footprint to 2,151 sites, aggressively outpacing domestic market leader Café Amazon and shifting the competitive landscape in East Asia's third-largest branded coffee market.
Bumper Brazil Harvest Forecasts: Price corrections on the B3 and ICE exchanges were heavily pressured by revised private and public forecasts (such as StoneX and Marex) predicting a historic, record-breaking 2026/27 Brazilian coffee harvest reaching up to 75.9 million bags.
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