Morgan Stanley Coffee Report

Strong performances in both the Robusta and Arabica markets boosted London to its highest close since March 2, 2015, while New York settled at its highest level since the 18th of February of the same year.   A steadier opening in New York was courtesy of yesterday’s gains in London whilst the U.S. celebrated Labor Day, and an initial impression of the net fund position coming in on the low end of expectations.  Further dissected, the net non–commercial position was basically unchanged week over week, while the net index fund position increased by 3,388 lots.   Interesting on the mix was the non-commercial side overall exposure decreased, as 3,906 longs liquidated and 3,890 shorts covered.  The index side was essentially all new longs.  The commercial side continues to attract attention as the gross long position at 53,082 lots stands at its lowest level since September of 2014 as industry struggles to find a fundamental rational for following the market higher. A 4th session of higher high’s saw Brazil producers take advantage of a firmer C market while the real strengthened 2%, as investors went in search of higher yielding assets, following Friday’s tepid U.S. employment report which suggests the federal reserve will keep a rate increase on hold.