Morgan Stanley Coffee Report

Following yesterday’s Brazilian political hubbub, and the correspondent BRL volatility, KC opened with a 1 tick gap up and never looked back.  An overnight announcement that Maranhao would drop his effort to annul the lower house vote to move impeachment to the Senate drove expectations of a stronger BRL.  Those looking for upside on the BMF open would be validated as coffee never revisited pre-8am levels.  From 8:19am when volume spiked on the greatest trading interest of the day onwards coffee fell into a quiet, spec centric trading pattern, moving no more than 150 points total.  A noon WASDE report that spurred a 1.5% rally in soybeans coincided with the final low in coffee and the day was effectively finished.  Robusta featured more interesting trading in relatively thin volume, as the market plummeted $24 after consolidating for 45 minutes near the high.  Value seekers emerged, and RC gained back $21 of the selloff before the close.  Paper bought 2000 N 1800 / U 2000 CS paying $1, while 1000 U 1850 / N 1750 CS also traded at a $13 premium.  Traders seem to remain focused on robusta as funds continue to buy into a decreasing roaster long, with options maintaining their allure.  Rumors that Dilma would resign ahead of the Senate vote were spread from such disparate sources through the session that there was little chance of the gossip existing in an effective echo chamber.  As of 2:30pm nothing is on the wire, and it appears that the measure will move forward, absent a last moment wrinkle.  As one Brazilian client said, the ship has no captain, and as such little would surprise going into tomorrow.