Morgan Stanley Coffee Report - August 31, 2020

Arabica rallied 270 points to 129.05 in a shortened month-end trading session, punching through the 130 line basis the 2nd month continuation for the first time since Jan 3rd when prices were in retreat from their mid-December high.  London was closed for the day, leaving KC with an abbreviated 7:30 to 1:30 trading day, but one would not know it from the volume, which was at its best in 2 weeks, and at a high for implied out right trading since Aug 7th.  FX was mixed and it seemed midday that a weakening BRL would find itself persuasive.  With the BRL 1.5% wider on the doorstep of 4.50 again KC fell in sharp fashion to 125.25 before spec buying arrested the fall.  After a brief period of chopping about around the 126 level, a steady bid aided futures higher in an unbroken fashion for the balance of the day.  Brazil selling was noted as one would expect as FX adjusted KC prices traded to their all-time high again.  Certs fell another 38,738 bags in post-settle reporting, bringing the total to 1,233,66 bags, the lowest since March 2000.  The 360,963 bag draw for the month of August was the largest single month in data available from Bloomberg (beginning Jan 1995).  Z/H closed -0.75, 25 points stronger, while the 1 year Z/Z settled -3.96, +.65.