Morgan Stanley Coffee Report

A subdued option expiration day as coffee couldn’t get out of its own way.  The systems seemed determined sellers and with a scarcity of aggressive buying most traders seemed uninspired.  The normal correlations seemed largely irrelevant as a weak dollar, weather risk, a strong commodity complex (specifically crude) all would be supportive measures on a typical day.  The BRL fluttered between unchanged and -1% throughout the session as a ramped up FX swap program checked any further gains.  Acting President Temer expressed concerns over the pace of gains the currency has made which coupled with the authoritative action of the central bank shook sentiment a bit weaker. As depicted in the weekly chart below, the market posted its 4th week of lower highs and lower lows.  Spread volume wound down to 12,204 across all contracts, more than half of which was in U/Z, as one would expect as the index roll was largely completed. Robusta participation was again lackluster with futures trading around ½ clb equivalent as it has all week.