Morgan Stanley Coffee Report
A rough day for the longs in the coffee market as a strengthening dollar and resolution of the truckers strike in Colombia caused a dash for the exit, with little support provided from industry who have attracted considerable attention for haven lost cover. The greenback steadied today on signs of improvement in the U.S. economy and while the Fed meets next week and there is little chance of a rate hike, the prospect of a September hike is gaining traction. The Brazilian real fell the most amongst all LATAM currencies as the central bank extended its intervention to weaken the currency. KC opened up at the high of 14695 (+10 on day) drifted sideways and was followed by fresh selling pressure as word spread of the resolution of the truckers strike, although it is interesting to note that while the truckers strike resolution was cited as a motive to sell, memory does not recall it being mentioned as a compelling reason to buy. The gap from July 8-11 was filled (14135-14485), yet rather than finding support into the gap, the market continued to trade lower as systems related selling became more aggressive and the recent sense of buying urgency was absent. As far as the week's trading rhythm goes, see below the CRB chart overlaid with KCU. Every picture tells a story don't it?
The COT report came in on low end of expectations with non-commercials net long 36,489 lots.
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