Morgan Stanley coffee report - June 4

Coffee rallied 90 points, closing 99.10, posting strong gains between 8am and 9:30am NY time on a combination of recent spec shorts covering, roaster buying, and the BRL proxy trade as the FX climbed steadily higher.  After reaching a peak of 100.75 in KC, trade profit taking seemed to initiate fresh short term system selling, briefly sending prices back into negative territory.  The BRL however kept going, maxing out at 5.0181, and jobbers covered shorts for the final positive print. Spreads were strong across the front 3 switches, gaining 10 points in each, and closing 35 points higher at -8.90 in NN.  NU went out -1.45, inside the recent range and stronger for a second consecutive day ahead of Friday’s index roll commencement.  London also saw positive flows, outpacing her sister market on a relative basis, 1202, +23.  Both spec and roaster buying was noted down the board.  N/U pushed steadily higher as well on heavy volume (6200+), closing -16, +3.  Both markets are recovering recent losses in what is otherwise largely consolidatory trading, each now only slightly oversold on a technical basis.