Morgan Stanley Coffee Report - July 15'19

Arabica capped a surprising session up 360 points at 110.25.  The market was under pressure early, falling into negative territory under the weight of broad based Ag selling.  Sugar saw a 4500 lot sell at 6:30, Corn saw 7k lots around 9:30, and KC was hit with 1000 lots at 7:45.  A stronger dollar and weaker BRL should have been problematic by all typical standards.  The COT revealed the funds at their least short since September 2017.  Nevertheless, while the all these factors persisted, coffee turned upward around 10am and never looked back.  Intraday lows came in right around the 26dma.  The source of the rally remains a mystery, but at an estimated 20k lots of outright volume, it was real buying.  Option volumes were strong, led by 3500 U 100P on the nose, or 68% of the total OI.  Around ½ of those came via the U 105 / 100 1x2.  Robusta closed $10 higher at 1434, waiting until minutes before settlement to rally into positive territory.