Morgan Stanley Coffee Report

Prices gapped a cent lower on the opening (14640) which proved to be the low for the day as coffee reverted higher in tandem with an influx of macro buying in all non-energy related commodities in the complex. The $1.50 level in Sep KC has coincided with the real trading close to a one year high and has encouraged more hedge selling out of Brazil as differentials fail to strengthen in the wake of  the “C” market  trading at 17 month high’s.  For the first day in 5, New York traded a lower low, yet given the 15 minutes the market traded in the negative little opportunity was taken.  Roaster activity is being closely monitored as the commercial side is carrying the largest net short since December of 2014.   As of last week’s COT report the net commercial position was 32% of total open interest, while the average commercial position going back to when the CIT report started has been 21% net short. For point of reference, the range since January of 2010, which is when the CIT report started, has been between long 2.2% and short 50% of total open interest.  Food for thought, albeit with many caveats thrown in the mix, when considering just how “short” the industry stands from an historical perspective.