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APRIL 1, 2022 COFFEE & TEA MARKET REPORT

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April 04, 2022

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Weekly Coffee and Tea Report

Coffee Market

An interesting week for the C market. Prices closed up about 3% week to week not particularly impressive unless we consider that they started the week down about 3.5% from last. A three-week high was seen as the market posted its first back-to-back weekly gains since the February high was registered. Lack of selling was notable as prices bounced. Light spec selling early in the week failed to gather steam and industry buying provided firm support into last week’s lows. Short-covering helped push the week’s high as smaller specs squared up. Larger funds are sitting on a small net long at this point and were not much of a factor. Differentials continue to remain firm regardless of the C market gyrations. Some light buzz was seen around Colombian defaults though there was no hard news. Shipping continues to be the major factor in much of the differential equations. At this point, port congestion continues to plague the globe and is causing a lack of containers in many locations. Central America, especially Nicaragua, is suffering from this at the moment. Little direct input from a macro perspective with commodities seeing a choppy week. The Brazilian Real continued to strengthen, seeing a one-year high against the Dollar. Further incentive for Brazilian farmers not to sell.

Technically the market ends the week and the month in a positive stance. Indicators are pointing higher near term. The market seemed to affirm support into the 210 area with the week’s action and chart patterns are suggesting another run higher will be seen before too long. A positive hammer formation was seen on both the weekly and monthly candlestick charts. A break of today’s highs would point Elliott patterns higher as well. A poke below 200 is still not out of the question but would not be holding back on needed coverage waiting for that move, the risk remains to the upside overall. Would expect volatile action for the foreseeable future and prices to remain high until there is a change to the overall production outlook.

Tea Report

A mixed report across the tea world this week. A rather large auction in Kenya was met with good demand. Thus, leaving only 12% unsold. Any Russian demand that is normally present was negated by lower volumes that week’s past. There has been some hail damage in growing areas West of the Rift. Argentina was met with good rainfall this past week (about 3.5in/9cm). While this helps, production is still behind last year’s figures. Southern hemisphere origins are hoping that the warm weather continues at least to mid-April. Logistics remain a concern across all avenues. Ocean freight carriers were asked to report rate information for 2021, which may scare some carriers enough to think about general rate increases for the short term. Fuel prices and surcharges remain high and are continuing to cause issues. At this point, even inland logistics are feeling the strain. Trucking and rail lines are under tremendous pressure and are seeing some prices hikes as well.

For further insight and analysis on current coffee and tea market data, take a look at the weekly report from the Westrock Coffee commodities team.

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April 04, 2022

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