Morgan Stanley Coffee Report Feb 22, 2016

The world was awash in green today as a positive tone was set to begin the week, as Crude rallied around 7%, expectations rose of additional Chinese Central Bank (PBOC) stimulus ahead of the G20 meeting in Shanghai, and constructive performances cross assets and continents reemerged. The COT provided impetus for buyers as well, and while a -20k net non-commercial number is not sufficient to spur a significant short covering market on its own, the mix of surprise and the abetment of the macro were enough to turn system funds
into buyers. KC managed to clear the 40 & 50 day moving averages along with mid Bollinger band that has been a recent source of resistance. The Robusta COT reflected a coincidental -20k net managed money number, evidencing recent short covering from historic positions. With a likely technical announcement of Great Britain’s referendum of continued EU membership coming tomorrow, plenty of room for fiery discourse is on tap with what should be a long running story in 2016. The BRL gained nearly 2% on the day, supported by the Chinese spurred EM expansion, yet with GM apparently set to pull $1.6B in planned investment due to political and economic risks, one wonders how long those gains can hold.