Coffee Market

The C market was volatile again but posted a second week of gains. Prices closed up 5% week over week as the market moved back into familiar territory. Lack of conviction from larger speculative shorts was the main driver as they covered positions. The market saw good industry support below two dollars and this was a reactionary bounce off of that support. The move was aided by a generally “commodity positive” macro picture. Further inflationary data and recession fears (or confirmation) saw the Us Dollar remain strong and commodities in general post gains on the week. In coffee land not much in the way of developments. The Brazilian crop is progressing well though some feel flow has been lighter than expected. Physical business remains minimal. Differentials remain very firm despite the C market gyrations and any activity seems focused on spot positioning rather than forward looking business.

Technically the market ends the week in a somewhat neutral stance and the month in a slightly more negative posture. The market remains in a familiar range at the end of the week despite trying to extend lower last week. Overall chart patterns continue to paint all the activity as a large corrective pattern off the year’s highs. Would continue to expect a broad range of roughly 180/240 to constrain prices through at least the end of the year, barring a major development. Prices below two dollars still seem to present good value overall but otherwise would continue to try and remain patient into market upswings. For the near-term volatility is likely to remain high and opportunities should present themselves to extend cover over the months ahead. 

Tea Report

It was a relatively quiet week in the Tea market with the continued trend of higher grades finding good demand and lower grades remaining at auction. There was continued activity from Russia at origin which is promising but still not strong enough to support some of the underperforming sectors. Kenya is one of the main benefactors of Russian activity, but they are continuing to see unsold teas pile up at auction which highlights the concern of how these farmers are balancing their books. Another concerning trend is the substantially smaller export numbers out of Ceylon which doesn’t even take into account the diminished production and lack of fuel preventing transport. This could spell disaster for the Ceylon tea farmers and their economy as a whole. 

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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