Morgan Stanley Coffee Report

Low volatility persists in both KC and RC as global roasters maintain their buying posture while the systems seem content to continue taking the other side of the trade.  Industry was active from the open until the close, spanning at least 4 continents, and origin remains largely sidelined. A spate of data both in coffee and otherwise provided talking points, with anticipated, yet eye-popping YoY export data from Indonesia confirming delays out of Lampung.  Nielsen US scans for the month of May were positive in sales dollars, and critically for the futures market, even moreso in sales volumes, as both single serve & roast and ground saw a YoY gain.  Yesterday’s cert draw in KC, released post-close, also sparked the interest of traders early today, providing additional overnight support in the face of what was a negative commodity environment for much of the session.  With Chinese PMI still indicating a difficult growth environment, the ECF likely stuck in neutral, a host of US releases coming in the next two days, and additional corruption induced shakeouts in Brazil, there is a veritable macro minefield that will be need to be negotiated by the week’s end.