Morgan Stanley coffee report - May 14, 2020

Coffee gained 165 points today, closing 106.70, it’s first positive close of the week, after holding trendline support.  Futures ignored early BRL pressure to a fair degree, legging higher even as the FX was trading a new low of 5.97.  While the markets seemed to anchor themselves to each other later in the day after short term specs covered and roasters added cover on the technical hold, the more interesting observation was the remarkable similarity in volume terms to yesterday.  Outright implied volume, total volume, and spread volume were nearly identical. KCN implied outrights were 9843 vs 9781 yesterday, total exchange volume was 33,657 vs 33,397, and 13,679 spreads vs 13,420.  Meanwhile the day’s volume weighted average price was the same as the settlement, and while the settlement was up 165, the VWAP was only 65 higher.  All in all an extraordinarily orderly day.  Even certs were quiet with an unchanged print.  London gained $21 to close 1168, running ahead of pace of KC for much of the day.  Inventories fell another 90 tons / 1500 bags.  K OI remains a stubborn 980 after 13 K/N traded -26.