Morgan Stanley Coffee Report March 3, 2016

New York coffee prices sprung to life today, aided by positive momentum in the Brazilian currency.  The real capitalized on Wednesday’s gains, adding another 2.4% in value (3.79$/r at print range of 3.87-3.78), amidst new developments in the “Carwash” probe. It was reported that senator Delcidio Amaral gave testimony to prosecutors that may implicate President Rousseff, a development the market perceived as increasing the chances of a new government more committed to fiscal reforms.  This came on the same day the national statistics institute reported GDP fell 1.4% in the final quarter of 2015, and 3.8% on the year, which was actually better than expected, yet still the greatest plunge in 25 years.   May coffee rallied through the 11630 highs of the previous four sessions which set off buy stops from the smaller systems yet stopped short by 5 points of trading into the 11885-11905 gap.   An encouraging close with a net gain of 240 points by the end of the day bucked up against the recent range much the way it held the 11335 lows of the 20th of January by 5 points.  A range thus defined or the brink of a breakout? Judging by recent action much will depend upon the path of the real. Spreads down the board strengthened between 20-35 points as the cert drawdown (-7,560 today),  is viewed as hard evidence that justifies the bid to the structure.  Across the pond London traded in a quiet $26 range and settled with a $3 gain as the market consolidates within the parameters of Monday’s notice day rally.