Morgan Stanley Coffee Report - April 27, 2021

​Macro correlations give and macro correlations take – that was the theme (see below chart) for today’s price action as KCN closed 143.00, -2.85 and RCN  fell $16 to 1452.  After the DXY drove prices tick to tick last Friday, and the BRL / BCOM did the same yesterday, the Softs basket was the featured trade for today as the Sugar, Cotton, and Coffee markets found precious little separation.  With all three markets (as well as the Ag complex in general) well overbought entering the day a correction was due and the market received it; Cotton was the worst performer on the day, Coffee 4th, and Sugar 6th, with only modest gains in a triumvirate of grains saving Ags from uniform losses. Volume was similar to yesterdays – above recent averages but well off immediate extremes – and volatility was high intraday.  Spreads were effectively unchanged, gaining a tick in the spot, losing one in the 1 year, yet the aftermarket pendings print raised eyebrows as an additional 40,736 bags were put up for grading, bringing the current total to 116,586.  The increase was the largest one day change since Jan 2, 2020 (nearly 17 months), and the total is the largest since Feb 4th.  With so much fluidity in markets and liquidity looking for homes, a roughly 12% gain for Ags in April (14% for coffee), and a sense amongst many coffee traders that the moves has been too much, too fast, tomorrow’s month end trading should be interesting.