September 17, 2021 Coffee and Tea Market Report

Coffee Market

The C market saw another week of modest choppy activity and closed virtually unchanged week to week. A narrow, by recent standards, seven cent range contained the price activity and volumes were modest. Some industry buying was noted toward the lower end of the range but otherwise activity was quite mixed. Larger specs remain long the market has not been put under any pressure. Origin selling pressure is almost non-existent at this point. The Colombian main crop is slow to start after some excessive rains and Central American harvests have yet to start. The weather watch for Brazil really hasn’t started yet. Weather remains mostly dry. There were some flowerings noted after some rains in southern Robusta areas but for the most part, it remains a waiting game for another month. So little to talk about from a fundamental stance. News and dialogue were focused more on shipping issues that continue to plague Brazil and Asia predominantly. Costs are many multiples of prior year and delays; cancellations and container shortages continue. Many expect the issues to continue into the first half of next year. So far Colombia and Central American shipments seem to be dodging the worst of this, but fears remain. All of this is keeping differentials firm and new business fairly slow. The macro picture provided some light pressure to the commodities sector overall as the Dollar strengthened on the week. 

Technically the market ends with a weak negative bias in place. The consolidation over the last few weeks has put the market in a positive, technically, where arguments can be made for either direction. At this point, short-term chart patterns are still open to further losses with potential toward 170/165. That said, such a decline is not a foregone conclusion by any means. At this point a push back above 195 would open the doors for new highs. Longer-term chart patterns still show potential toward 230 or so overall. At this point would continue to target 175 or lower for any needed buying and try to remain sidelined, if possible, otherwise. Prices back toward a range of 150/170 appear likely longer-term but at this point it seems that won’t be likely until well into next year. Would expect that the last few weeks of waning volatility won’t last too much longer. 

Tea Report

A slightly smaller tea auction this week in Kenya compared to last. There were 122,000 packages offered with a good absorption rate leaving only 26% unsold. The trend continues over the next couple of weeks with smaller auction volumes which follow seasonal norms. South India continues to have good absorption with many auctions reporting between 13-30% unsold teas. The challenges continue with no end in sight. Logistics concerns are not showing any easing in the short term. Many of our contacts are claiming an ease mid-2022 if we are lucky. There is plenty of tea around the world to be purchase but quality is king. Many of the plainer teas are weighing down markets while better and brighter teas are drawing attention and price. Weather has been challenging in many origins as well. East Africa has seen cold and hail affecting the crop while Asia has been mainly wet. The concern of drought is still on the mind of those awaiting the Argentine crop.

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.