Morgan Stanley coffee report - May 20

Arabica fell 140 points, closing 105.65.  Opening Brazil related pressure set the market off on the wrong foot and little fight was offered during early the European hours.  A long slog higher kicked off about 90 minutes after the commencement of trading as light roaster buying found an absence of fresh offers.  With the Dollar and commodity wind in the sales futures continued to gain steam, stepping modestly into positive territory (+60 points) a bit after the 8am traditional NY opening as the BRL found its footing following yesterday’s late selloff.  However, 15 minutes later axed selling sent KC spiraling back towards its low, effectively ending the day.  While prices recovered for a couple hours it wasn’t to be and the lows were traded going into settlement.  With the FX and proxy markets offering upside motivation and thin volume the weakness was a bit odd, but again apathy seems to be the consensus sentiment amongst traders.  Total volumes by all measures remain poor, and today only modestly improved upon yesterday’s woeful effort.  With prices trapped, uncertainty related to covid discouraging risk taking, and no fresh news the trading is best considered consolidation.  The VWAP for each of the past 7 trading days has been between 106.02 and 107.98 with total exchange volume peaking at 33,397 lots for any single day.  Only once over that period has outright trading in the 2 most active contracts cracked 10k.  Robusta fared better, closing $2 in  the black at 1186.  May open interest is finally cleaning up with 906 lots issued ahead of Friday’s last notice day.