Morgan Stanley Coffee Report - March 30, 2021

​Coffee finds a new reason to weaken each day it seems, leading the pack in an ugly commodity day lower, 122.60, -4.45, the largest one day price decline of 2021.  Selling was relentless if not necessarily dynamic; volume continued to come arrive in an orderly fashion throughout the entirety of the traditional pit session as futures marched lower with no relief.  The chart was remarkably similar to cocoa (the 2 worst futures performers in March save the VIX, followed by cotton and sugar), and KC shrugged off a strong performance from the BRL (+.80% around the time of KCs close).  That familiar FX correlation has seemingly only worked on days of devaluation, while some other impetus is found on +currency sessions.  While commodities as a whole were down nearly 1.5%, suggesting the continued negative effects of macro inputs in real time, KC’s table leading decline reflected the more specific technical hurdles coffee faces.  Yield continues to widen, KK now at -9.45, -.25 combining with lower outrights for a 7.7% prompt roll yield (6.5% 2nd month), and the 20, 50, and 100 dmas all sit as overhead resistance while encouraging spec selling.  Oscillators are now well oversold, suggesting a pause is due soon, but with month end tomorrow and roasters taking advantage of the opportunity for much needed coverage, a significant rally seemingly will need some effort.  London trailed in sorrow, falling $28 to 1348, though spread there weakened for a second day as well (KN -25s, -4, NU -21s, -3)