Morgan Stanley Coffee Report

An exciting end to the week for the coffee market courtesy yet again of developments in Brazil…today on the constructive
side. The real and bovespa rallied 5.5%sharply after federal police raided the home and office of ex-President Lula, fueling
speculation support will grow to impeach his mentee and successor, President Dilma Rousseff. A media frenzy ensued in
Brazil as their first working class President being investigated in the Petrobras graft probe was seen as a major step in
cracking down on corruption. Financial markets reacted positively and the real surged as much as 4% against the dollar,
setting the stage for a sympathetic breakout in coffee. The 11885-11905 gap was filled as soon as news filtered out and
currency markets became active. Follow through was muted and gains were initially capped at the 120 level basis
May. From 11:20 until 12:53 the market traded in a taut 12065-12095 range before mustering another push higher and
bucking up against the 12130 level 3 times into the close. A nice spark to end the week with N.Y. chalking up a 4.8% gain
and the real trading to a 6 month high and having its best week since 2008.