Morgan Stanley Coffee Report - Nov 25, 2020

Arabica gained 125 points on the day, erasing yesterday’s loss and adding two ticks for good measure, settling 117.15.  Outright and option volumes were thin ahead of tomorrow’s holiday (2 month outright implied futures 13,099 vs 10 day avg 18,412, top Arabica option strike H 190 C 478x), but spread trading saw an uptick to a still quiet  8794x (3500 more than yday) after the past 2 days’ unusually low interest.  Ags were broadly weaker, particularly softs where Sugar, Cocoa, Cotton, and OJ all fell on the day, making KC as an outlier for the session.  The BRL gained 1% and the DXY weakened .25% adding some support.  Price action was choppy; flat during the “pre-(imaginary) pit” hours, strong during the opening US trading, aggressively sold to intraday lows at 11am, and a climb back late.  A report from Ihcafe pegged Eta/Iota damage risk between 119k to 413k bags in Honduras depending on how the next 30 days go, but by and large the commercial sentiment was unmoved by the forecast.  Certs fell 846 bags, 2 lots of Honduras, one of Nicaragua, while there were no gradings.  Robusta gained $13 to close 1366 as Jan became the spot contract.  1097 Conilon were issued to clean up the books on the last day for Nov deliveries.  Structure was steady, FH +2 to -10.