Morgan Stanley Coffee Report

KC posted an outside day low, only the fourth negative performance since the calendar turned.  A midsession high of 156.95 was the peak (thus far) for the young year, yet the lack of meaningful extension through the KCH 50% retracement from the low was noted by several traders as a reason for lack of enthusiasm.  With Robusta stumbling on the back of a hefty fund positioning and in front of this week’s commencement of Tet, Arabica found itself lacking fresh buyers.  As recent conversation with respect to upside in KC seem to focus in many cases on the Robusta balance sheet, perhaps the 2nd consecutive lower session was an affirmative sell side indicator for some New York traders.  With technical congestion, a fairly stable currency environment, and what many consider to be a fair price range in KC, one would expect buyers to emerge on relatively shallow dips, yet a considerable breakout to the upside could require fresh news or a motivated spec.  Should London continue to abdicate some of its recent gains, one wonders if KC will track it lower, or if the two markets can separate in what many would consider a fundamentally illogical way for the short term.