Morgan Stanley Coffee Report - Dec 21, 2020

Arabica closed down 95 points at 124.30, clawing back  the bulk of early losses but unable to turn a sustainably positive print on the day.  Global futures were under pressure as a fresh lockdown in the UK, and border closings to the UK in a variety of nations, was prompted by the spread of a mutated Covid strain believed to be of greater contagiousness.  Prices gapped lower on the open and fell as far as 120.40 by 5:25am EST.  The news of fresh restraints on in person commerce in Europe overwhelmed the agreement to a US$900B relief package announced stateside, yet some of the reaction seemed to be in haste.  Experts expressed optimism that vaccines would maintain efficacy on the virus and markets arrested their fall around 6am, bouncing off lows.  While European equities traded lower on the day the Dow had recovered at the time of writing (just shy of 3pm EST) and the dollar was back at unchanged, having given back its early flight to safety gains.  Volume in KC was above recent averages as both early macro selling and later value buying drove interest.  Spread volumes were an exception, and price reinforced that it was a flat price-forward day with both spot and longer term structure unchanged.  Certs rose 3625 bags on a resumption of grading while pendings ticked up 5200.  London gained $3 as well, closing 1382 ahead of Thursday’s January FND.  EFPs clocked in at 6039 lots, nearly split between F and H.  FH weakened $4 to -22.  Wednesday is the chance to clean up unwanted positions before notices.