May 11, 2018 Coffee and Tea Market Report
The C market saw prices fall almost 3% on the week. Two weeks of gains were erased rather easily. Much of the pressure came from Origin sellers. With the Brazilian harvest due to start over the coming weeks farmers were happy to sell to raise capital. Despite the weak market prices a weaker Brazilian currency gave them good value. Larger spec funds were buyers again and over the last few weeks have taken the edge off their record short position. This has helped negative sentiment a bit as well. Industry buying interest only appears to be around the recent lows and the market declined easily under modest pressure.. Otherwise there remains little to talk about. As mentioned above Brazil is getting ready to harvest a bumper crop. The quality and volume yields will be watched closely once it begins. Weather has been decent for development overall but the frost watch should begin soon as it does every year. This is not the same threat it was years ago but it can throw some tension into the market. Civil unrest has continued in Nicaragua but so far this has not impacted coffee flow. Commodities in general have seen increasing volatility over recent weeks.
Technically the market’s long term downtrend remains intact overall. The recent price bounce has shaken things up a bit but there is no evidence so far of a major trend reversal. Short term would expect some further price consolidation within the last few weeks’ range. Overall continue to view the recent lows as good value. Later in the year would expect to see prices ranging toward 150.
Tea auctions held steady this week. Argentina’s season has officially closed. The remainder of processing is sorting and packing outstanding contracts. Kenyan demand improved but generally pulled in lower prices- up to 30usc losses. There are hail storms in the West of Rift district and some areas are seeing decreased yield due to the colder weather. Sri Lankan bidders showed strong demand for brighter teas but lacked willingness to buy many other types. Overall, teas that did sell typically gained margin in comparison to last week’s prices. Weather is cloudy and wet. Crops are increasing. Orthodox and dust types sold very well in North India. CTC types faced a less promising market. South India did not hold auctions this week. Both regions our displaying warm wet weather and good crop yield.
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.