Coffee Market

In now familiar fashion, the C market saw a very volatile week, but prices changed little overall. Early losses saw a six-week low, but prices reversed sharply midweek on larger speculative short covering. Further gains this morning sputtered on light volume and the market reversed again, easily slipping back into slightly negative territory for the week. The activity continues to draw apathy from the industry as most remain sidelined. There has been little news. As is typical when there is little to talk about there has been a lot of focus on exchange stocks as they slipped below 1mm bags. While this is significant in some ways historically it is hard to predict market direction for a sustained period of time by the ebb and flow of stocks. In the current environment of high prices, it is not surprising that these lower priced stocks would be dwindling. Converse to this non-exchange inventories seems to remain fairly healthy. Of course, being that the market reversed all the gains on the week it would lend some doubt to this bullish argument for now anyway. Overall, the market is very close to the midpoint of the last few months’ range and awaiting some fundamental developments. Brazil continues to see good weather for the harvest and forecasts remain quiet from any dangerous cold. Physical business remains light overall and differentials quite firm. The macro picture continues to churn with volatility high across the board. 

Technically the market ends this week with a modestly positive bias, but the volatility really underscores the lack of overall direction. As mentioned above, prices are near the midpoint of the range that has unfolded over the course of the year so far and despite some fairly substantial moves they seem to gravitate back here. Chart patterns continue to suggest a broad range will hold prices for at least the balance of the year (barring a supply disruption). With that in mind would continue to view prices toward 210 as value for needed coverage and prices toward 190/180 as value to extend coverage. Otherwise continue to try and ride out the volatility and keep an eye on weather forecasts in the near term. 

Tea Report

Selective but healthy demand remained this week as we continue to demand for the higher qualities while lower qualities are not moving. This is a bit troublesome as the unsold lower quality lots continue to pile up at origin. Production overall remains positive with weather staying favorable except for the heavy rains seen in North Asia which has cause a slight downtick in offtakes, but this should stabilize as flood waters continue to recede. The crop is beginning to wind down in South Asia and there’s still nothing out of Argentina at the moment. Overall, things have remained on the same course that we’ve seen over the last few months with a multitude of uncertainties remaining globally so many are holding out until more information is known.


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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