November 17, 2017 Coffee and Tea Market Report
The C market dropped 3% on the week giving back almost exactly the gains saw last week. Apathy rules. Intraday volatility is quite high but overall the market remains mired in a long standing range. Prices touched a five week high early on as funds covered a small bit of their record short position. Once that buying thinned though the market retreated quickly. There continues to be industry support into the lows of the range though and the market continues to be unable to generate any momentum in either direction. Much of the action was focused on cleaning up positions in the spot December contract which goes into notice period next week. There remains little to talk about and many are looking toward the holidays already. The physical side of the market remains quiet overall. Differentials are firm and the industry continues to appear well covered. Brazil weather remains in discussion with some saying recent ranges have not yet been enough to guarantee a bumper crop. This will not be known for many weeks though. Colombia continues to see very limited movement with prices firm. Talk of quality issues continues as well though there seems to be no clear reason for the tightness. Slight drawdowns were seen in consumer stocks though they remain high overall. The Dollar remains firm overall but the weaker Brazilian Real has not generated much selling out of origin so far.
Technically the market is consolidating. Indicators continue to throw out mixed signals and momentum has been minimal. At this point the weak close points to a push lower short term but honestly signals in both directions over recent weeks have not been following through. Still the longer prices consolidate the more violent an eventual breakout will likely be. Longer term chart patterns still point to a move higher over the coming months. At this point if the recent lows are tested it would seem to again present good value overall.
There was a slight uptick in demand across most markets. The Argentinian season has now begun. Weather patterns are currently favorable but the forecast shows next week being dry. Kenyan prices were irregular closely following quality. Prices netted even with some brokens showing significant gains but being matched by losses by PF1/PD/D1. Crop production is slightly down by volume but healthy. Crops remain low in Malawi. There is good demand but rates are low following quality. Sri Lanka experienced good demand. Lower quality leaf fetched 5-15usc dearer while more specialty grades were firmer by similar margins. North and south India’s prices were down following quality. The North’s crops are slightly down while the South’s production is slightly up over annual averages.
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.