Morgan Stanley Coffee Report - February 24, 2021

​Arabica recorded a step backwards in both price and liquidity as futures fell 105 points to close 137.25.  Whether this proves to be a “pause that refreshes” or the beginning of the end is very much a topic of disagreement between bulls and bears.  For the moment there is unease between the momentum signals which are bullish and oscillators which suggest the need for a pullback.  Today’s highs fell just short of trendline resistance going to November’s highs, yet the late day weakening did little to put recent shorts under significant water; since Monday’s breakout the VWAP has been 134.75 with the largest entry buckets at 135 and 137.  Total volume was around 32k lots below the past 2 days’ 72k lot performances, a large step back that was reflected both in smaller outright and spread activity.  Spreads were mixed with KN a tick wider at -1.80 and KK unmoved at -6.50.  London held its gains better against motivated origin selling thanks to a persistent bid, gaining $3 to 1463.  Counterintuitively the spread weakened however, K/N $4 wider at -19.  H/K was flat at -16 as notice period continues with 6425 lots of OI remaining & 513 conilon tendered on the day.