Week 4, 2015
Tea market report 19-23 January, 2015
With the European Central Bank (ECB) starting to print money, global commodity markets are lifting up, without exception and without any major fundamental changes in supply or demand. Fortunately tea is not a paper trading commodity and prices are not depending on a decision of the ECB. Despite the independence of the ECB, Mombasa market continued its upward trend for most grades. Exceptions were certain PF1categories, which showed a healthy correction on past weeks rally.
Traders who were convinced that the market would continue to overflow with tea in Q1 and only observed the bears in the market are, so far, proven to be wrong. The weather of the past weeks showed that the amount of rainfall in Kenya is lower than last year and the quantities of green leaf plucked are declining every week. The weather forecast doesn’t show us any improvement for the coming week. Watching the bulls in Kenya, we shouldn’t forget that in the first 6 auctions of this year, >100.000 packages more will be offered than last year, which wasn’t a bad start of the year either.
Malawi is slowly drying and takes stock of the damage made by the thunderstorm. Some tea factories are running on diesel generators due to a lack of electricity, hopefully the damaged infrastructure will be repaired soon. The Malawi auction has made a good start of the year, with good demand in this week’s auction, buyers look forward to the arrival of fresh good quality invoices.
The Jakarta auction didn’t follow the East African tea auctions in the upward trend. Due to declining demand and the absence of a few buyers, market traded generally steady to easier. The Colombo auction showed a contrary trend and gained a little more spirit compared to last auction sessions. Crop is steadily improving, but due to Pongal festival, auction quantities are declining until week 6.
The big question mark for the coming weeks will be, if the bulls will start taking over the market from the bears?
“In trading, the rear view mirror is always clearer than the windshield” – Warren Buffett