Morgan Stanley Coffee Report

A stronger dollar translated into a weaker CRB and coffee bucked the trend, catalyzed by rains and cold weather forecast for tomorrow morning in Brazil’s coffee belt. Rain fell significantly ahead of cold air moving into southern coffee areas which raised concerns about flowering and the need for follow up rain.  The rain, along with talk of some potential for patchy frost in highest areas of coffee country, captured the attention of specs, causing coffee to rally and, along with sugar, to trade to the top of the CRB heap.  The Arabica market opened on the low for the day and specs stepped up to the plate as U.S. traders manned their desks, causing prices to rally from 142-14545 as stops were triggered through the 14400 downtrend line of resistance.  Technical buying kept prices aloft, and with little resting selling in place, prices rallied to a high of 14660 (+5.00) on the close, to settle at the highest level since the 1st of August.  Chalk it up to some weather concerns getting the ball rolling, while systems funds carried the ball over the finish line.  Tomorrow is first notice day for the September contract. September open interest stood at 4,504 entering the day and with 3,973 U/Z trading today  between 300 and 210 under, not much is expected by way of notices.