Morgan Stanley Coffee Report - Dec 22, 2020

Arabica saw a downtick in participation en route to a 124.20, 10 point loss.  While the daily marker was negative it provides something of a misimpression as the day’s trading happened at a higher price overall – KCH VWAP 124.83 vs yesterday’s volume weighted avg price of 123.07.  An opening spike lower was immediately erased and futures were remarkably quiet during the overseas session.  A strengthening BRL led KC higher from 8am until just about 9 when an FX reversal (and day long USD strength) dragged KC back to unchanged over the following 2 hours.  Brazil inflation, while slightly below expectation, nonetheless hit its highest mid-month reading in over 2 years as the December IBGE MoM hit 1.06% and YoY narrowly topped the last reading at 4.23%.  Food rose 2%.  Spreads weakened, HK a tick to -1.95 and HH 45 points to -7.70.  Certs rose 8870 bags with pendings at 60,920.  Robusta closed $4 weaker in March, 1379.  Tomorrow is the last day to clean up unwanted January positions ahead of Thursday’s FND.  FH gained $1 to -21.