Morgan Stanley Coffee Report

Coffee prices vacillated with a firmer bias as we head into the weekend with cooler weather in the forecast and, while most do not predict a frost of any significance to hit the belt, many traders opted to square up positions and not add to exposure ahead of the weekend.  The market opened up around unchanged and drifted 2 cents lower before traders in the western hemisphere manned their desks and buyers picked up the pace, rallying the market  to the 13935 level (+350) before backing off and spending the bulk of the session meandering about the 138 level.   Open interest fell by 3,068 lots in yesterday’s topsy-turvy session as new longs exited and/or were  stopped out on the reversal. A late push in New York saw the market trade to new highs for the day post settlement as some last minute short covering came to the market.  The Robusta market suffered its biggest  decline in 2 months, gapping $12 lower on the opening, which activated systems selling and ultimately violated the previous 4 days series of higher lows.  Since the lows of June 1 in N.Y. the Sep/Sep arb has widened from 48 to 61 cents as London rallied to 10 month highs but has failed to keep pace with New York’s enthusiastic gains.  New York which ended yesterday at the bottom of the CRB, ended what has been by all accounts a very interesting week at the top of the complex in today’s session. Let’s just say next week has a tough act to follow!