Morgan Stanley Coffee Report - January 8'19

Arabica gained 115 points to settle 102.75 in quieter than expected trading.  Index allocations are locked in basis settle today, with expected net buying in KC of somewhere +/- 5k lots over the coming 5 days.  This appears to have excited no one, as coffee has managed to ignore the imminent buying up until the brink, as well as a mid-session CL/SB rally, the BRL strengthening from 394 to 370 from Dec 26th through today’s morning trading, and a developing (if admittedly low probability) dryness story to lose 125 points since Christmas – or gain a whopping 75 YTD depending on which arbitrary recent holiday calendar measure one prefers.  Stranger still, KCH traded in a 35 point range for the final 2+ hours of the day, spanning the fresh early settlement period.  Initial thoughts were that the machines hadn’t been recalibrated, but the innocuous action at the historic 1:23-1:25 window suggested disinterest was more at issue.  Robusta fell $3 to 1542, missing Friday’s high by $2.  Volume was thin and structure roughly unchanged (HK -18s, $1 weaker, KN -15s, $1 stronger).