Morgan Stanley Coffee Report - May 19, 2021

​Coffee fell 185 points to 150.95 in the front KCN contract (-1.21%) and Robusta lost $13 to 1502 (-0.86%) in what was a challenging day for assets overall.  Volume was underwhelming, particularly in Robusta where the aggregate 8034 lots trades was the lowest since the end of March, as traders waited to see what would be in store with this afternoon’s Fed minutes & risk suffered as cryptocurrencies fell on Chinese regulatory warnings for digital coins.  A number of global inflation prints came in early showing an uptick in CPI (Europe, UK) for April, as well as an above consensus May preview in Brazil.  With hyperfocus on the potential for a macro shift in expectations risk was pared in predictable ways; commodities (ex-precious metals) and equities fell,  while the USD rose against G10 peers and EMEA / LatAm alike and the US 10Y yield spiked to +2.5% around 3pm EDT.  Coffee outperformed the commodity basket as a whole as energy was particularly troubled, yet the loss was right in line with the avg 1.28% depreciation across ag & livestock markets.  A steady bid in N/U kept support at the -2.00 line for another day, and the switch closed unchanged at -1.95 and N/N widened a tick to -8.30.  What direction the markets take tomorrow will be interesting to follow, if there is a homogeneous reaction at all.  Via Morgan Stanley Research “there were a few notable surprises within the April FOMC minutes that suggested after a meeting where the Fed showed incrementalism in adjusting its policy language, under the surface there were "a number of participants" pushing for further incremental steps on adjusting policy in the months ahead.”