Morgan Stanley coffee report - July 21

Arabica gained 200 points, closing 101.75 as it vacillates inside the range going back to the end of June.  The VWAP for the day was the same as Friday’s essentially erasing yesterday’s selloff, even if the settlements were about ½ a cent apart.  Volume took a sizeable step backwards by every measure; outright estimated volume was roughly 2/3 of yesterday’s, total exchange volume was down 20k to 25,455, and spreads fell by over half.  Prices were aided by the BRL which gained 3% to its strongest level (5.16+) since June 23rd.  Heavy weakness in the DXY, which traded its second lowest level of the past year as Europe “agreed on an unprecedented stimulus package worth 750 billion euros ($860 billion) to pull their economies out of the worst recession in memory and tighten the financial bonds holding their 27 nations together” in the words of Bloomberg, along with optimism on a vaccine and payroll tax reforms were catalysts for the BRL as the FX busted through the 100dma.  KC structure was mixed with U/Z a tick wider at -2.75 and Z/Z 25 points tighter at -7.00.  Certs rose 4125 bags as 4950 passed grading out of 10,727.  US stockpiles continues to wither, down another 825 bags out of NY to a total continent wide 93,767.  Pendings are down to 2776.  The Robusta market was similarly strong and suffered less volatility on its way to a $39 gain.  Futures closed 1317, the highest level basis the Sept contract since March 25th, and on the 2nd month continuation since March 3rd.  Total volume exceeded that of NY at 27,022, a rarity.