Morgan Stanley Coffee Report - March 22, 2021

KC fell another 95 points, a third consecutive day of lower lows, lower highs, and negative close, en route to a 129.00 settle and a fresh low for the week.  On consecutive days Arabica has now closed below the 20dma (133.30) and 50dma (129.10), driving negative feedback from traditional chart aficionados looking for a deeper correction.  A longer term view looks better with last week’s lows holding and 128 holding firm, a price only eclipsed once since Feb 22nd’s breakout – March 9th when futures fell with the BRL weakening on news of Lula’s potential return to politics before reversing higher and leaving patient industry buyers below.  Structure was again mixed though slightly weaker as both the nearby (KN -2.05s, -.05) and 1 year (KK-8.65s, -.10) slide wider in the least dramatic way possible.  KC had familiar company on an otherwise bullish commodity day as softs congregated in the back of the bus, KC -.73%, SB -.82%, CC -1.93%, CT -.64%, OJ -.77% (Sugar, Coffee, and Cotton were joined by Cattle as the worst performers in the BCOM), even as the commodity complex rose around 1%, the DXY was a negligible headwind, and the BRL strengthened an impressive 1.7% around KC’s close.  Today was the last trading day for KCH1, so there should be a rollover gap on the pure continuation charts Monday morning.  London fell $6 as well, settling 1380.  Spreads gained a tick in the front 2 rolls, erasing yesterday’s loss.