Morgan Stanley coffee report - May 13, 2020

Coffee fell another 230 points to 105.05, as the BRL continues to weigh on price. Futures were sold off the opening and then held for the European hours, leaving a small hole to climb out of.  By 8am KC had accomplished that, conjuring a ½ cent positive print onto the tape.  However domestic concerns in Brazil and reactions to Fed Chair Powell’s comments with respect to downside economic risk and a lack of support for negative interest rates swung the pendulum against many assets, coffee of course one of them.  With the BRL trading as wide at 5.9416, another record per Bloomberg, and lack of new bullish news the result was somewhat preordained.  Volume was ok on a recent basis and the VWAP was a full cent above the settlement.  Nonetheless it was the lowest close since March 17th.  Spread volume was the largest of the month at 13,420, as structure widened 35 points from N0 to N1, 10 points in NU.  Certs fell 11,632 bags to 1.79M total.  London fell $33 to 1147 as well as the BRL weighs there too as well.  Conis continue to be a point of challenge to any recovery.  Certs drew another 2667 bags, with 1167 of those in the port of London.  There were again no notices in London where OI remains 992..