Morgan Stanley Coffee Report - Dec 15, 2020

Arabica recorded a mostly quiet session, rising in the early hours en route to a 8:18am EST 127.40 new high, suffering a batch of selling roughly 30 minutes later, steadily climbing back to positive territory, and finally notching its 124.50 low during the settlement window as the day was marked with a 124.65, -1.50 decline.  While the 2 largest clips of trading occurred during the 2 steepest selloffs, the VWAP on the day was actually higher, 125.8319 vs yesterday’s 124.7862, suggesting steady interest at levels above recent resistance.  Nonetheless volume was just about the recent 2 week average and the trading that garnered the most interest on our chats was a second day of elevated EFS’s, 2571 in KCH.  EFP (AA) volume was also notable as a percentage of the total, 2837 in the front 3 months (2343 in H) and nothing in the latter, suggesting that industry was focused largely on cleaning up the end of year physical pricings.  While the lack of extension of yesterday’s rally assuredly disappointed some of the bulls, KCH managed to hold the retracement breakout and most seem to favor a later time frame for upside.  Nonetheless rallies (and selloffs) rarely happen at the consensus expected time so caution both towards the expected quiet year end is warranted.  Spreads were slightly weaker, HK -.05 to -1.85, HH -.10 to -7.45, and certs grew 21,483 bags on an 84% pass rate.  Pendings fell 19,689 to 63,375, the lowest in 12 calendar days.  Robusta trailed in interval if not direction, weakening $4 to 1372.  FH gained $3 to -24, holding yesterday’s active lifetime low of -27 for a fresh double bottom.   GCA stocks should be updated around 3:30pm EST.