June 19, 2020 Coffee and Tea Market Report
The C market continued to deteriorate this week, extending it’s decline roughly 1% with the nearby months trading consistently in the sub dollar range. Mid-week saw the funds lock in some profits via short covering, the rally was short-lived though as the commitment of traders report saw funds extend their short position another 6 thousand lots. Roasters for the away from home market are seeing an increase in orders as states continue to open from Covid-19 lockdown. The physical spot market remains active and diffs extremely firm. Questions around global demand during these uncertain times are likely to maintain downward pressure on the C Market. Brazil’s harvest is progressing nicely by all accounts and shipping while notably slower is still flowing across all origins. Overall would expect to see the market trading sideways with potential chop that may present buying opportunities at what are historically attractive levels.
Across the world tea auctions, there was mixed demand and qualities. Kenya saw another large auction with around 204,000 packages for offer but lower intake. 24% of the offers were unsold at the end of auction. Cold weather has created a sharp drop in production but there is plenty of tea to sell. This drop in production may help to increase demand. Indian tea auctions saw another strong week with good prices and demand. The domestic demand for CTC dominates while orthodox is still needed and buoyant but not as high demand. Indian exports have dropped around 19% as of the last figure. But this could be the results of the domestic market outpricing the export market. The second flush quality Assam teas are now at auction in some areas which is good for growers and buyers. Rains can be seen across many of the growing regions world wide. The end of the year forecast looks to be much drier. This could affect total tea production but with so much still being available, it could do more to hurt the overall quality of tea. Continue to watch this space.
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.