Morgan Stanley Coffee Report

The Arabica market traded to its highest level since April 22 , 2015 basis the second month chart, under volatile conditions not witnessed since 1999, as traders grew skittish over the weekends forecast which called for close to but non-threatening temperatures in the southern portion of Brazil’s coffee belt. Volume at 111,362 with 41,000 spreads exceeded yesterday’s record lots traded as July/Sep traded 22,000 times amidst the frenzy in the outrights.  The CRB saw its first inside trading session since April 14th, and, while coffee traded to a new high with a gain of 520 points, it ultimately did a classic about face into the close, ending the day with a 4% loss and at the bottom of the commodity heap. That said, we still held yesterday’s low, and while traders grow cautious that the bottom could fall out should the forecast trend warmer, there is the significant caveat of being a part of the commodity complex which traded to a 19 month high yesterday, weather notwithstanding.  Tomorrow ought to prove another interesting day as July options go off the board.