March 22, 2019 Coffee and Tea Market Report
The C market rebounded slightly this week, but there is little to be excited about with the nearby months still trading well under a dollar. The story overall remains much the same with producers hurting at these historic lows, and roasters steadily extending coverage and buying into the decline. The market shows little to no signs of life although the Funds slightly eased out of their short position to 75K lots this week. On the physical side we see little activity, with most industry buyers participating only hand to mouth, while differentials remain extremely firm. Origin participants continue to decry the low prices, and search for alternatives, which there are unfortunately very few of. On the macro picture, the US dollar took a hit this week when the Fed decided to maintain interest rates steady for the second straight meeting. Much of Europe breathed a sigh of relief when the European Union decided to extend Britain’s deadline for Brexit, Theresa May and Parliament now have until May to agree to a plan. It was widely agreed that a “No-Deal” Brexit would have been disastrous for both the economies on both sides.
There is little reason to think that we will are anywhere close to breaking out of this long term steady decline. There is obvious value at the market continues to make historic lows. Our recommendation of layering coverage into new lows as they occur remains the same.
Tea markets remain stable this week. Weather and production are typical for this time of year. Argentina continues to have a good season. China production will begin next month. Recent cyclone in Mozambique and Zimbabwe has had a severe impact on the port of Beira but tea production in nearby Malawi has been mostly unaffected except for power outages.
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.