Morgan Stanley Coffee Report

Arabica ignored the ascendancy of Robusta on the open, falling 75 points in the first two minutes on spec selling.  However it quickly rallied back inline and spent the European hours tracking its sister market.  The arrival of Americas based traders led to a pickup in volume just as industry buyers sloughed off coincident to the European lunch hours.  Volume picked up around 8am EST as it typically does, yet added little in terms of volatility.  It is subject to debate as to whether KC found its lows on the apparent new shorts reflected in OI, lack of trend strength to encourage momentum traders to continue attacking the low end of the range, or spillover commodity sentiment that directly impacted grains as Presidential regulatory advisor Carl Icahn reportedly presented a deal to overhaul the Renewable Fuel Standard.  Brazil will return to trading tomorrow, which seems more likely to impact the coffee market through BRL based correlative trades rather than origin pressure.  Notices go out in Robusta tonight, and while nearly 12,000 H AA’s match up well against the 13,455 OI in the contract, 6180 lots of volume (5883 H based spreads) traded during the day.  With structure reaching out to -40, with a weighted average price of -37, at least a few traders still hold out hopes for intrigue inducing deliveries.  World coffee exports for January 2017 came in at 9.84 million bags.