Morgan Stanley coffee report - May 27

Coffee closed the day 105.10, +1.50 on the back of a macro influenced bid and ending a 4 day run of losses.  The BRL gained ground from the start with political quiet after the video that had been the source of controversy regarding President Bolsonaro was released and proved not to be damaging.  A general improvement in EM sentiment along with continued short covering was enough to overcome a 25 year low in foreign investment flows, deflation, and Brazil’s ascent to second place for the dubious distinction of most confirmed covid-19 cases (trailing the US).   Risk was on down the board with economies kicking back into gear as developed nations are broadly moving into the terminal phase of virus growth for the time being and businesses reopen.  The dollar weakened and BCOM components gained value in near-lockstep; only gold, silver and gasoil were down on the day at the time of KC’s close.  Spreads suggested it wasn’t only macro however as NU posted a higher high, higher low, positive close for the first time since May 14th and N/N saw active volume trade as it lost a tick, settling 5 points below the actual low print for the day.  London closed higher as well, gaining $12 to 1219. Structure was weaker there however, widening $2 and $1 respectively in the front 2 switches.