Morgan Stanley Coffee Report - Dec 18, 2020

After yesterday’s session of subtle intrigue, Friday’s trading was a display of frank aggression with early bullish headlines and typical early morning strength giving way to familiar selling towards 8am, punctuated by a roughly 1000 lot minute sell off at 9:21 EST.  Futures recovered off the that low (123.50), failing to find follow through, but trading was choppy for the rest of the day and KCH settled lower, 125.25, -1.35.  Still, prices remain above major moving averages, the trend is bullish, and the market is only moderately overbought, as the chart recorded a second weekly higher low, higher high, positive close and 6th such week out of the past 7.  The BRL was choppy and slightly weaker while the Dollar forms a nice layover with KC, the 30 minutes or so including and following the seller’s bludgeon notwithstanding. Commodities were broadly higher with KC joining sugar at the other end of the spectrum, joined by wheat in its various forms and precious metals as the rare decliners.  Volume was back after yesterday’s hiatus as total exchange lots came in just shy of 30k lots, up 10k from yday, spreads almost exactly doubled to 9107, and outright trades came in above the 10 day average.  Structure tightened incrementally, HK +.05  to -1.85 and HH +.15 to -7.25, the strongest close since Nov 27th’s -6.75 two-and-a-half month high.  Certs declined for a 2nd consecutive day by 1375 bags (Hondurans in NY), the first time that has happened in December, albeit aided by the fact no gradings occurred on either day.  Robusta lost $7, closing 1380 while on a weekly chart legging higher after last week’s arguable dragonfly doji.  FH gained $4 to -18.  The London COT revealed 2318 gross lots of commercial buying against only 12 lots of commercial selling.  Managed Money liquidated 892 longs while adding 320 shorts, yet Swap Dealers were the bigger seller, liquidating 714 longs and adding 1574 shorts.