March 9, 2018 Coffee and Tea Market Report

Coffee Market

The C market failed to follow through on last week’s strength and fell back to post its lowest close in three weeks. Interest remains modest on either side of the market. Industry buying did not follow last week’s rally and support therefore remains into new lows. Spec buying seen last week was from smaller players that lacked conviction and sold this week in disappointment. Larger funds covered a bit more of their massive short but remain at very high levels. Origin for the most part has been out of the market. The physical market remains sporadic. Differentials nearby remain firm though some forward business seems to be picking up a little. There are some concerns popping up about the Colombian mid-crop both for size and that it is running late at this point. Otherwise there is little to talk about on the fundamental front. Next week much of the industry will be together for the annual National Coffee Association conference. This sometimes leads to a market move as people compare ideas and thoughts on production. Tough call this year though as the market apathy has been quite strong.

Technically the market is still off the lows after the key reversal chart pattern seen off the low last month but the reaction off that move has been rather disappointing for a bull argument. Short term chart patterns see some potential for an 8-10 cents bounce and seasonal tendencies also see a window for some short term strength. That said there is no evidence of a major low in place. Would continue to view the recent lows as good value but would not look to buy into strength just yet.

Tea Report

Tea markets continued to be down this week. Argentina’s season is continuing to run well. Weather is warm though temperatures did begin to fall slightly last week. Sri Lankan markets continued to show lessened demand. Prices remained on par with last week; 10 – 20usc lower than typically expected. Weather is dry and bright. Crop yield is beginning to taper off. 34% of Indonesian offering were left at market. Java, Sumatra, and CTC types sold but at reduced rates. The area is cool with scattered showers. North and south India displayed good demand this week. CTC types seemed to do well at every Indian market while the better types sold a bit dearer than usual.

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.