September 1, 2017 Coffee and Tea Market Report

Coffee Market

The C market saw another choppy week unfold and lost ground again. While it remains well within the recent range it did post its lowest close since the June lows. The weakness came on the back of continued fund selling and they end the week sitting about 30k lots net short. This is surprising as they are quickly nearing their record short (42k) which was seen into the recent lows but the market remains ten cents from those lows. Industry buying continues at a healthy pace on a scale down basis. Technically the market is a bit mixed but maintains a negative near term stance. Indicators are oversold though and the trend seems mature. Chart patterns continue to suggest the market is at the low end of the broader trading range and another move higher is likely. There remain little in the way of news. The Brazil crop is complete at this point and focus now shifts to the rainy season. Rains will be watched over the coming weeks and subsequent flowering will be the first barometer of the next developing crop which is forecast to be very large. Otherwise there is little in the market to talk about. Physical business seemed to pick up a little but differentials remain fairly firm with the market’s recent weakness and business seemed to be more hand to mouth than anything. The macro picture was choppy as well but overall the Dollar remains weak. Today saw the monthly employment report come in below expectations. Overall the near term outlook continues to suggest that the low end of the recent range presents good value for the months ahead.

Tea Report

World tea markets were selective this week. Kenya had a slight improvement in demand. Prices varied by type with medium grade teas leading in gains. High end teas lost 5-15usc. Crops seem to be improving and weather is steadily getting warmer. Malawi saw a slight gain from its top colory grades but was overall down due to losses for other types. Crop yield remains low. In Sri Lanka high growns were down 15usc while low growns were up 5 to 10usc. The entire country is experiencing showers but crops are down in western parts and up in the east. India’s markets were led by a sizable gain in colorly types. This was mirrored by a similar loss in the less colorful teas. Crops remain healthy. Rains span the country but seem to focus in the south.

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.