Morgan Stanley Coffee Report - Oct 5, 2020

Arabica fell 175 points to 107.20 to start the week.  KCZ/H weakened 20 points to -2.20, Z/Z settled its weakest level since June at -7.95, -.75, and certs were unchanged with a 9960 bag increase to pendings.  The positioning remains a risk in the minds of traders, reinforced by Friday’s continuation of the stubborn spec long, and it seemed jobbers were the most active source of support on the day.  Outright volume on the day was well below recent norms, while active spread trading boosted total volumes to around average (42,816).  Options were unusually quiet, led by a mere 664 Z 125 C, with aggregate volume of calls and puts 9022, less than ½ of Friday’s standout volume.  The FX was unusually dismissed, particularly for such a quiet day overall, as the DXY was under pressure for the bulk of the trading day, but particularly from 10am onwards.  The BRL likewise tightened as much as 1.9% during coffee trading, extending those gains later in the day to 5.55, +2.4%. Robusta was weak as well, falling $22 to 1268.  XF lost $4 to close -25.  All in all it was a less dynamic session than the market has been accustomed to this year,  something that by nature is unlikely to remain the case for long.