Morgan Stanley Coffee Report - January 8, 2021

Coffee erased ugly early action, sinking as low as 119.20, just above the 50 and 100 DMAs in both KCH and KC1, and bottoming out just after 8am.  The balance of day was spent in ascent on the first day of the Index rebalance and Feb option expiration en route to a 123.70, +2.60  performance.  Spec buying and some commercial value picking aided prices higher while origin selling was seemingly scant on the KC side.  Prices closed well clear of any relevant strike price and did little to change that in the post-settlement hour, leaving little in terms of likely excitement with respect to out of money exercise or abandonment.  FX was hardly a consideration with big picture flows dominating.  Prices were in opposition to spreads where H/H closed 30 points wider at -9.45.   Robusta had trouble matching KC’s reversal, running into system and some origin selling on any bid.  H closed $18 lower at 1318, extending yesterday’s losses through trendline support and settling a dollar above the Dec 12th swing low after taking it out by $3 intraday.  Spreads were mostly unchanged while Jan deliveries remain unresolved.