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December 3, 2021 COFFEE & TEA MARKET REPORT

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January 12, 2022

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Weekly Coffee & Tea Market Report

Coffee Market

The C market saw yet another volatile week. Prices closed unchanged week to week but traded back and forth in a seventeen-cent range in chaotic fashion. Much of the range was made on Monday when prices collapsed after initially trying to work higher. It was a macro generated move as prices across all asset classes plunged on renewed Covid fears among new variant reports. Prices then slowly recovered the rest of the week as the dust settled. Larger speculative funds were again the main players, selling aggressively on Monday and then buying positions back today. Industry buying was seen in a flurry into the lows and remains pent up into any notable decline. Producers selling remains patient and sporadic overall. The physical side of the market remains mostly quiet and differentials firm. There is little news. Central American crops are underway, but flow is minimal so far. Colombian continues to see excessive rains cause concerns over the harvest and quality. In Brazil the crop has progressed enough to see a wave of crops tours starting as agronomists try to get a real gauge on potential output for next year. Those reports will likely start flowing into the market in a week or two, so likely some more volatility will be seen. The macro picture helped spark the sharp selloff early on but then input was mixed. Generally, though it was a negative week for the Dollar and equity markets and positive overall for commodities. The impact, if any, from the new Covid variant remains to be seen obviously.
Technically the market ended the week in a positive stance overall. Indicators are still a little overbought though and the choppiness of the week makes a strongly positive stance risky from current levels. Chart patterns continue to suggest higher levels will be seen at some point though, short term, there seems to be some more corrective activity likely. At this point a push toward 225 seems possible and would certainly target that area for any needed coverage short term. A longer-term target at 255 still appears viable for the coming month or so. Longer term would continue to expect the market to settle into a range of roughly 180/220 but it may be some months before it tries to push toward those levels. Best approach near term would seem to be averaging coverage forward when the market offers an opportunity. Continue to expect high volatility for some time as well.

Tea Report

The Argentine tea season is starting to gain steam. After the initial slow start and dry weather, useful rains and higher temperatures have come to the growing regions. Logistics remain a struggle. While ocean freight may be settling for the time being, inland trucking and port congestion in the US is continuing to cause issues. Freight rates from Asian origins remain high but are settling slightly. Many importers and blenders are revisiting specifications to try and replace some Chinese grades. Kenya saw increased demand this week of the 186,000 packages. Quality may not have been the primary driver this week. Prices looked tempting to most buyers, and some couldn’t resist. Only about 12% of offers were unsold after this week.


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

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January 12, 2022

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