May 15, 2020 Coffee and Tea Market Report
The “C” market had a down week, reclaiming much of the previous week’s gains and dropping roughly 4% overall. The decline correlated with a deterioration of the Brazilian Real that posted a new low, trading down to 5.97 against the dollar. This currency move brought attractive prices to Brazilian farmers who are enjoying favorable weather conditions for the start of what is looking like a record crop. While reports are mixed country to country, to date the industry has yet to see any large-scale ill effects from Covid-19 in Latin America. Most of the Central American crop is harvested at this point. Colombia has seen delayed shipments but has been able to harvest most of the mid-crop harvest despite transportation limitations for seasonal labor. Brazil reports available labor and shipments are flowing just a bit slower than normal. Domestically the physical business remains slow but active in the spot market with roasters feeding hand to mouth as they cannot be sure of demand outside of a few weeks in a volatile macro environment.
Tea auctions this week look a lot like the previous. Kenya saw somewhat depressed demand with a slightly smaller offering. Out of the 177,000 packages, 14% were unsold. This increase in outlots could be the function of larger auctions on the way. Next week will hold fairly large auction with 185,000 packages and the following week will be even larger at 191,000 packages. Rainfall is sporadic across the growing regions but is still following seasonal norms. Malawi saw very little movement this week but there were some bright spots around some of the better made teas. North India saw small auctions with mainly older season teas which were sold at a dearer rate. South India had somewhat delayed with some truckers reluctant to operate. There was overall good demand for better liquoring teas. But the main take away for the Indian tea centers were the presence of auctions. We may be a long time until returning to a new normal, but we are starting to see progress.
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.