Morgan Stanley Coffee Report

After posting a 6.7% rally from Monday’s opening low before 9am EDT, coffee spent the rest of the day fighting to maintain positive signs.  It was not to be as a week’s worth of relentless buying would vanish as the growing negative sentiment became too much to overcome.  While fundamental bears are abundant in the trade, the session featured plenty of selling by longer term bulls as well as many express concern at the speed at with the market has moved higher.  Strong early numbers initially buoyed both markets, as retail sales and industrial production numbers in China supported commodities.  US data would follow with similarly encouraging consumption indicators, as retail sales grew 0.7% YOY, well above expectations and CPI remained strong as well.  A friendly technical outlook coupled with reassuring economic news in the 2 leading global economies would become quickly undone with the release of open interest, reflecting a growth of 1992 lots overnight, punctuating a 4 day expansion of 8301 lots total.  With the appearance of heavy new longs into the rally, and expected large COT, and perhaps equally important strong DXY / weak BRL, selling appeared at 9:15am EDT, as the CRB, Cocoa, & Crude posted a similar pattern, preceded by a sugar collapse and dollar rally.  A second sell-off would occur at 11:47am under suspicious circumstances as a 450+ lot bid was shown then abruptly disappeared as KC plunged roughly 250 points before rallying instantaneously halfway back.  With the longs on the defensive, perhaps it was inescapable that a third and final deluge of selling would appear minutes before the settlement period, eventually driving KC to its lows.  With the COT Net non-commercial position at +35,173, one wonders if the selloff was enough to recalibrate positions, or if additional weakness will materialize Monday morning.  It bears reminding that the gap from 14435 to 14405 remains open.
U.S. Green Coffee stocks increased by +126,424 bags.   6.2 million for the month of June.
 
COT Net non-commercial position came in at +35,173.