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MARCH 18, 2022 COFFEE & TEA MARKET REPORT

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March 21, 2022

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Coffee Market

The C market saw another choppy week unfold. Prices closed little changed after touching a four-month low early on. The story continues to be large speculator long liquidation for the most part, though some producer selling was noted. Industry buying continues to have a good appetite as new levels are seen. No change to the overall “coffee story” and much of the movement continues to be on money flow generated by the macro picture. Physical business remains quiet overall. Differentials remain firm as well. Much of the industry continues to play things closer to the vest than they normally would. Freight and supply unknowns will likely keep things that way for the foreseeable future.

Technically the market turned a positive note with the late week bounce though indicators are still mixed. Chart patterns are still allowing for further losses short term though they are not necessarily needed to complete what appears to be a large correction off the February highs. A poke below 200 remains a possibility if the market seeks out standard retracement levels. A break back above 240 would point to new highs. Overall, would continue to expect an eventual range to settle in but it remains very possible that the market could see prices toward 270/290 before that happens. Would continue to view prices toward 220/200 as a good area to extend needed coverage through the end of this year. As always, volatility will likely remain high.

Tea Report

Many of the same concerns remain in the tea world this week. Logistics remains on everyone’s mind although prices and availability are stagnant for the time being. Fuel prices drive surcharges and are the only real increases we are seeing, for now. Among other possible issues, there is a Teamsters Rail strike in Canada that could cause delays via rail lines. North American ports are seeing absurd amounts of congestion with delays coming from unloading vessels. This is causing some vessels to skip ports entirely and drop containers at the nearest destination port from there. There are also two major Chinese ports on lockdown that could cause more issues as well. A slightly smaller auction in Kenya this week saw decent demand. 197,432 packages were offered and only 13.5% were left unsold. Production is following last week. Origins that need rain have not received enough to steady the seasons. The main concern at this point is the need and availability of fertilizers. With Russia and Belarus combining for 30% of the world’s Potash (potassium compound used to make fertilizers) exports, this could be cause shortages or increased costs. This combined with the need of many origins without naturally fertile soil, could cause larger issues.

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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March 21, 2022

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