Morgan Stanley Coffee Report - Dec 29, 2020

Arabica recovered the bulk of yesterday’s loss, closing 205 points higher at 125.40.  Interestingly, those extra 55 points of weakness yesterday came with an additional roughly 2700 lots of additional outright trading in KCH, suggesting a bit of additional heavy sledding on the downside, at least for the moment.    In many ways it was a reversal of yesterday’s setup; the BRL gained 1.3% around the time of KC’s close, the BCOM gained 0.8%, and the dollar weakened roughly .4%.  Out of offices remain heavy as one would expect during the short holiday sandwiched week, yet that didn’t seem to effect coffee grading.  Certs rose 25,030 with a 94% pass rate on the day while pendings jumped to 116,207, the largest since February, +36,350, the largest increase since the day after Thanksgiving.  Brazilian coffee now makes up 26.2% of the total exchange inventory.  London went out unchanged on its first day back since Christmas eve, closing 1383.  Deliveries are stalled for the moment, 7 lots being retendered by a non-traditional stopper, yet OI came into the day a heavy 4937 lots in the January contract.  Only 21 F traded on the day out of a smallish 6592 total.