Morgan Stanley coffee report - June 10

Coffee tumbled again with KCN closing 96.75, -1.05.  OI has rolled over into U, yet outright trading remains in KCN - although today may be the last that that statement holds true as U outright volume came within roughly 400 lots of N.  Volumes ticked up in both futures and spreads on Day 4 of the index roll, typically the most negative of the period.  It is perhaps a sign of the times then that N/U tightened 10 points to -1.80 after weakening for the prior 3 (typically stronger) days.   Roaster buying was noted in increased volumes in all 2020 calendar contract months.  The BMF will be closed tomorrow for Corpus Christi with no BRL or coffee trading.  Although Sao Paulo had moved the holiday forward to accomodate social distancing, the exchange chose to keep market observation in place, thus tomorrow’s closure.  Certified stocks fell an eye popping 36,931 bags, however pendings grew 29,885.  Adding the 7046 bags that did not immediately get regraded to an expected 10,160 bags that will fail using recent passing rates, there is a “real” 17,206 exchange outflow.  London was a mixed bag with the active RCU contract rising $6 to 1253 and the prompt RCN falling 7 to 1214.  N/U settled on its low, -29, a mere dollar off the lifetime low.  The USDA wrote down coming Vietnam crop on lower potential yields due to weather, yet it bears mention that conditions have deteriorated further since the time of the rainfall charts included in the GAIN report.