Morgan Stanley Coffee Report - January 31'18

KC tumbled lower ending the day with a 265 point loss at 12230 basis the March contract, its worst one day loss since the 8th of January.  The session began trading in a relatively stable  12380-12520 inside range, but at 9:40 a.m., prices gave way and fell from 12390-12245, in sync with a sinking BRL.  The lows of the past 3 days were violated, as was the 9, 26 and 40 day moving averages, and, adding insult to injury, stochastics crossed to the downside.  One only need overlay the intraday real chart with that of KCH8 to observe the currency’s impact on the rhythm of today’s trading.  Open interest fell by 4,945 lots  in  spread and outright long liquidation on yesterday’s action, which did little to encourage already disappointed bulls. From a flow perspective, industry nibbled as a matter of course and origin were in absentia, however yet again it was the Algos that kicked into a seemingly insatiable sell mode. Volume at  58,495 included 21,369 spreads (12,862 H/K) and was the highest since the 14th of November.  Tomorrow’s open interest should prove interesting.