March 2, 2018 Coffee and Tea Market Report

Coffee Market

Another fairly mundane week unfolded for the C market. Prices touched a three week high but the market fell back and closed little changed week to week. A modest technical bottom formed early last week has seen some speculative buying but overall volumes have remained modest. Funds have covered a small portion of their record net short position but remain the elephant in the room overall. Industry interest is thin overall with buying limited to new lows when seen. Origin selling has been minimal as well with the price so low overall. Despite firm differentials and some slightly better demand little coffee is flowing. Fundamental news remains sparse. Some talk of excessive rains delaying Central American crops and reducing Colombian production overall. Still the Brazil crop continues to develop well and the market seems unconcerned (or complacent?) overall. The macro picture has not been providing any direction the last few weeks either.

Technically the market has remained positive overall since last weeks “key” reversal but the bounce has certainly not been dramatic. At this point there is no strong indication that the low registered will be a major one. Short term there is potential to see the market test 128 to 135 but it would be within the context of a corrective bounce. At this point the recent lows continue to present value but would not look to buy into any strength as the lows will likely be seen again before long.

Tea Report

Tea markets saw a drop in demand this. Argentina’s season is continuing to run as expected. New season teas are hitting the US market. Weather is warm though temperatures did begin to fall slightly last week. After several strong weeks Sri Lankan demand lessened. Over all, the teas lost an average of 5-15usc. Weather is dry and bright. Crop yield is beginning to taper off. Indonesian demand was poor this week. Colory CTC gained a few cent but all other teas were down. Many teas were withdrawn for failure to meet sellers’ limits. Weather is warm and showery. Crop yield is running as expected. South Indians were irregular but closely followed quality. Top types gained a couple cents while others witnessed a loss. North India remained on par with CTC types gaining slightly higher prices than expected.

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.