September 29, 2017 Coffee and Tea Market Report

Coffee Market

The C market lost another 5% this week as Origin selling pressured prices. There remains little to talk about beyond the Brazilian weather forecasts. Some rains have moved into the growing areas and more are forecasted over the coming weeks. This, again, is normal for this time of year. So at this point the market has seen pressure as producers became a little more willing to sell basis the weather and a weaker Real. Smaller specs were also sellers as they place their bets on the weather normalizing. The decline put the market back into the range of last month’s lows where industry buying remains in place on a scale down basis and is providing support so far. Funds were buyers overall on the week and are showing much less of a consensus on direction. So focus will remain on the weather and crop development for the short term. Will the rains normalize and be consistent? Will flowering set well? The coming weeks will tell the tale and the market will likely remain volatile for the time being. Otherwise it was a very quiet week by all accounts. Physical business remains slow. The macro picture is providing a little weight to commodities overall, with the Dollar pushing two month highs.

Technically the market remains firmly within the range established since June’s low. At this point prices are basically in the middle of the range and direction is up for grabs. Indicators are oversold for the most part after being overbought last week. Chart patterns continue to allow for a test of the recent lows short term however longer term patterns continue to point to the low end of the range presenting good value.

Tea Report

Tea markets were generally strong this week. In Argentina, factories are being readied for the new season which should arrive in the next month. Kenya saw exceptional demand this week. This was led by an increase in PF/PD types. Weather is steadily getting wetter which is to be expected with the rainy season under way. Malawi had exceptionally good demand this week. Prices followed quality but generally held firm. Weather is dry and hot. Crops continue to be low. Improving crops led to firm prices and stronger demand in Sri Lanka. Weather wet in the west but very dry in the east. Puja celebrations kept Northern India’s auctions closed. Southern India had fair demand but a slight decline in prices. Crops are good and weather remains warm and showery.

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.