Morgan Stanley Coffee Report - May 14, 2021

​Arabica slid again, losing 140 points to close 145.00 on thin volume, while Robusta performed equally poorly, losing $35 to 1460 as the arb stays at 79.5.  Prices were under pressure early after yesterday’s surprising pending build in NY, and a 2000 lot sale order in U/Z (-2.65, -0.20) to open the day was taken as a proxy for a negative commercial response to the data.  Prices remained weak in the run up to the BRL opening, at which point the familiar proxy trade was back on and KC was the beneficiary of the currency tailwind, along with rising risk assets across the board.  An emphatic move higher at 9:45am, sending KC  to an intraday high of 147.75, was short lived however as short term specs took advantage of the higher prices to sell yet found a vacuum of replacement bids as KC tumbled 2c in a 10 minute span.  An interesting technical picture has emerged with a neat downtrend channel in place from May 6th high, yet trendline support off the early April lows continues to hold as well forming a flag; 146.40 projects as the key intercept for next week.  Meanwhile laddered moving averages below and the 1 year 23.6% retracement at 141.96 should offer short term support. On the Robusta front the COT revealed less turnover than man had imagined, as managed money added a net 4527 lots to 31,251, well below trade estimates, and commercials sold a net 4152 lots for a 42,406 net short.  Both are sizeable positions, yet something less than max.  On a day where London seemed unusually weak, keeping pace with her sister market, prices managed to find support at the 38.2% retracement of the YTD range (1457 vs 1456 low print).