Morgan Stanley Coffee Report - March 29, 2021

​Arabica fell 145 points to 127.05 on fairly low volume on a day where the macro winds offered early pushback, but where coffee also specifically underperformed.  The BRL was an impediment from the start as the FX traded to its weakest level in 19 days, eclipsing the 5.80 mark in the process.  While the currency was weighed down by a host of factors – contagion risk, Covid statistics, budget issues, plain negative sentiment – coffee had already been well into its decline before the currency opened, trading within 20 points of the intraday low during the pre-North American hours.  While commodities as a whole were peaking around 8:30am KC was unable to get off the mat.  The COT drove some of the specific negativity no matter if traders chose to look at the fund side (where shorts flooded in as 9 entities left the long side of the tape and 10 new shorts emerged) or the commercial side where needed paper was added both during the reporting period (+6,978 commercial longs, disagg w options) and anecdotally through the balance of the week, removing some of the sense of urgency from the roaster position.  Nonetheless, material selling failed to appear as KC holds around recent support and the consensus bottom end of the range, and the 1.13% loss in futures was almost the same as the 1.19% weakening in softs.  Spreads were unchanged in the front 2 period while the back end of the curve weakened further, KK -9.20, -.10, a 52 week low.  With the issues in the Suez canal improving after the Ever Given began moving again, some roasters are likely feeling some relief with respect to their specific inbound coffee, even if total supply was never a concern given destination stocks.  London declined more or less in line with her sister market, falling $23 to 1376.  KN widened $4 as well, closing -21 after retracing Friday’s -15 high.