December 22, 2017 Coffee and Tea Market Report
The C market saw another choppy week unfold and closed slightly lower on the week after giving back earlier gains today. There remains little to talk about. Funds remain short at record levels and have continued to keep modest pressure on the market. Scale industry buying continues into new lows but the intraday back and forth remains focused on smaller specs, some trying to pick a bottom, some trying to tag along with the short fund position, neither having much conviction. Hence the choppiness. Overall the funds seem to still be in charge. Despite not breaking last week’s lows the market did post its lowest close in six months. The year’s low remains the target for the funds but momentum remains fleeting. The coming weeks could test their resolve if they are unable to force a new low. Early January will bring the index fund rebalancing across the markets and the C market is expected to see roughly ten thousand lots of buying. Not a huge number overall but with little else to talk about it could encourage other buying. The physical market remains very quiet. Fundamentally there is little to focus on as well. Brazilian rains will become significant again later into January.
Technically the market is sending mixed signals near term. The lack of momentum suggests the decline is stretched out but there is no clear reversal signal showing. At this point would continue to be wary of a reversal though and continue to see current levels as good value. Even a minor correction could see the market move ten cents, or more, higher.
Tea markets saw solid demand with prices following quality. The Argentinian season continues to run smoothly. A slight uptick in rain is a positive sign for the region. Kenya continued its solid demand at dearer rates. BP1’s sold 5-10 usc easier. Weather is a bit dryer but crops remain healthy. There was solid demand in Sri Lanka. Auction prices among the various types ranged heavily but balanced as a whole. Weather leaned a bit towards the rainy side but crop quality and yield remain steady. Indian auctions met good demand. Prices were irregular following quality. Certain lots of higher quality teas would gain up to 5usc but this was selective in nature. Crops are low and the weather is quite warm.
For further insight and analysis on current coffee and tea market data, take a look at the weekly report from S&D’s commodities team.