June 1, 2018 Coffee and Tea Market Report

Coffee Market

The C market traded a one month high this week before pulling back a bit in the end. Overall modest gains were posted week to week. Over the last few trading weeks the market is slowly showing signs that the long unfolding decline has ended. Speculators are starting to play the market more from the buy side at this point. They have been encouraged to buy by the news of a truckers strike in Brazil. The strike is technically over already after lasting about ten days but delays caused could take a few weeks to normalize. The impact on coffee in reality will be little as long as things progress from here. With the new crop harvest just beginning it is doubtful delays will impact those shipments. Civil unrest in Nicaragua continues and it is starting to impact shipments. This bears watching as well. There was little other news. Brazilian weather seems fine so far for the harvest after a light frost scare a week ago. Physical activity remains light overall but the market bounce has seen differentials soften slightly. Overall commodities in general have seen an increase in volatility over recent weeks but there seems little directional consensus.

Technically the market has turned positive on both a short and longer term basis. Longer term charts are pointing to at least a medium term low being in place. After such a prolonged decline it is likely that the market would trade sideways for some time rather than reverse sharply. At this point would expect a range to unfold over the coming months of roughly 120/140 for the nearby contract. The lower end of that range would represent good value but would be wary of buying into further strength for now.

Tea Report

Markets remained steady this week. Argentina’s season has officially closed. The remainder of processing is sorting and packing outstanding contracts. Kenyan displayed exceptionally good demand. Prices were irregular but overall the market was slightly dearer than expected. Weather is wet and chilly. Crops are healthy. Fair demand is Sri Lanka at slightly easier prices. Select types made gains following quality. Weather is extremely wet and there is flooding in some areas. Crops are beginning to ease and may fall further unless the rain subsides. North India returned to norms after the last week’s high demand. Prices closely followed quality. Weather is ideal and the Second Flush is looking promising. Irregular demand in South India. Prices remained flat. The weather is cool and cloudy which is helping crops bounce back.

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.