March 28, 2022
The C market closed little changed week to week once again. For the first time in a while the overall range was less than ten cents. With speculative interest in the market very low after the last few weeks of selling there was little back and forth activity. Industry buying was noted but on much lighter volume than seen in recent weeks. Light producer selling was seen but overall, they remain very reserved. There remains little in the way of coffee news. Freight continues to present issues with the latest being lack of containers, notable in Nicaragua. Differentials remain very firm despite the recent C market decline. There is very little incentive for farmers or exporters to sell aggressively. On the macro side of things most markets that benefited price wise from the Ukraine invasion remain strong. There is little direct impact on coffee now that money has moved out of the market though. The Brazilian Real has surged against the US dollar over the last few weeks touching two-year highs. Another reason for Brazilian producers to remain sidelined.
Technically the market is mixed near term. The choppy lighter volume activity over the week suggests that the decline is running out of steam but, so far, there has been no signal of a reversal. Chart patterns continue to show potential for a poke below 200 short term but prices may chop around for a while as well. Bigger picture the idea of new highs remains viable overall and targets toward 272 and 290 are still present on the longer-term charts. Would continue to view prices toward 200 as good value for extending coverage. Expect that increased volatility will return before too long and from current levels, the most risk remains to the upside.
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.