Morgan Stanley Coffee Report

Activity in the outrights was somewhat haphazard as the 14075 print on the opening started out and held as the high for the session, that is until the 1:23 settlement, when a burst of spec buying took the market through the opening high and into the green for the only time on the day.  Arabica prices initially drifted lower, then came under further pressure to trade down 3 cents, as the dollar started strengthening, especially against the euro. Caution prevailed with today’s polls essentially evenly skewed on Thursday’s Brexit decision and ahead of Janet Yellen’s remarks before the Senate banking Committee in which she stated the fed is on watch for whether, rather than when, the U.S. economy would show clear signs of improvement.  Funds are thought to have added long exposure since last week’s COT report (19,137 lots), as a result industry are demonstrating patience in extending length of cover.  Similarly  managed money and discretionary specs express reluctance to buy the market at 140ish, however the action and push higher on today’s close felt curiously defensive in nature.  Position squaring ahead of tonight’s first notice day created volatility in the July/Sep spread which traded 9,000 times between 175 and 300 under.  The open interest in July entering the day was 8,382 lots and with 1,640 July AA’s posted not many notices are expected