Morgan Stanley coffee report - June 4

Arabica lost 95 points, settling 98.15 in choppy trading ahead of the index roll tomorrow.  Futures opened down but steady, weakening on the open and holding mostly constant during the European hours.  8am buying marked a new high and suggested additional spec shorts were covered following yesterday’s close, but things unraveled quickly thereafter.  A combination of weak commodities, strong dollar, weak brl, and risk off all coalesced allowing intraday specs to take control and wrestle KC prices lower.  With trade content to job what appears to be a range for the near term and origin and roaster both apparently willing to wait before initiating further large scale positions, the day unfolded as one might imagine – supported into weakness, sold on strength, and generally following the path of the FX and commodity markets.  N/U enters the roll period having shed yesterday’s 10 point gain with an equal loss, closing -1.55.  N/N weakened 10 points as well to -9.00.  Volumes were middling in every way as N and U outright trading saw their lowest volume since May 20th.  Total volume was also at its least impressive since the same day, while spreads saw a small uptick from Tuesday, but otherwise was also at a low since May 20.  Robusta was holding strong again until the settlement when prices plunged dramatically in verticality if not amplitude.  In the end the books were marked 1196, -6 on the day as N/U gained another $2 to -14, only $3 off the -11 double top and 52 week high of April 8 & 9.  Robusta certs fell another 7300 bags equivalent, leaving it a mere 65k bags from cracking the 2 million mark after standing at 2.23mm at the end of April and 2.395 at the end of March.