Morgan Stanley Coffee Report- February 26'19

Arabica succumbed to unrelenting pressure, wavering between sideways and down for nearly the entirety of the day while settling 96.80, -305.   The anguish engulfing the market finds many measures; a fresh KCK9 contract low (96.35), closure of the 98.20 - 98.60 gap many had presumed would exist for a generation, and the lowest 2nd month continuation price since Sept 18th at 95.10 when the non-commercials posted their record short position on the CIT, 151k gross / 113k net.  Fairly massive option volumes traded on the day, with 1600+ K 115 C leading the charge (paper buy ½ of them laid up around the NY lunch hour), 1500+ K 100 C, ~1200 J 95 P, and ~1200 M 120 C (paper again a buyer delta neutral).  Origin was nonexistent from our perspective, both in direct paper and in posting, leaving a consensus sentiment of astonishment amongst traders at the one sided flow.  Robusta continues to want for interest, falling $12 to 1538.  By most accounts Vietnam is undersold and Brazil has yet to begin marketing Conilons in any real volume.  Price action remains choppy across the pond, though structure tightening on the day was a source of interest as KN closed -7, +3 and NU -11, also 3 ticks up.