Morgan Stanley Coffee Report - August 24, 2020

Arabica gained 35 points to 120.15, giving back the bulk of its early gains yet remaining in the green.  The COT and structure both added some confidence to the buying, indicating a continued if modest interest on the specs behalf to add longs, while 2021 spreads are seemingly pricing a tighter supply picture than the narrative suggests.  The FX again was a primary driver as the Dollar weakened until around 8am EDT and the BRL opened up 1% stronger before both lost their positive KC mojo over the following couple hours, taking KC lower with them.  Certs fell 19,048 bags overnight, while pendings declined 9718.  Gradings saw only 1510 bags out of the 9718 pass.  Destocking took place in Antwerp (11,709 Hond, 3497 Mex) and Houston (4019 Hond, 1333 Peru).  This would seem to suggest regrades or stale spot coffee rather than a Brazil trial balloon.  Robusta notices go out tomorrow morning and should make for an interesting read.  OI came into the day at 5439 lots, yet only 2519 traded (+ a mere 10 AAs).  U/X closed +92, 21 higher on the day, and it remains to be seen if any of the long rumored conis show up as the exit.