Morgan Stanley Coffee Report

A shaky end of the trading week as the macro focus remains on the USD which strengthened following comments from St. Louis fed President James Bullard suggesting an April hike is on the table. As of this morning there was a 38% expectation for a 25 basis point hike at the June meeting.  These comments combined with global security concerns ahead of the Christian holiday weekend lent a flight to safety bid to the dollar.  Arabica prices opened the session on the high at 13095, a 15 point gap lower than Wednesday’s close, and proceeded to drop 2 cents before pausing to consolidate.  As currency markets became actively traded, the real swiftly fell to the day’s lows of 3.73 $/r which drove coffee down to the early low for the session at 128,15 (-2.95) while the CRB complex started to cave .  Prices unsuccessfully attempted to rally back to the 130 level amidst quiet dealings, and while the real held around the 3.70 level, the final half hour saw selling pressure ahead of the long weekend and much anticipated wild card of tomorrow’s COT report, which saw the market trade to a new low of 127.40,and a final print of 12765, coincident to the 200 day moving average in May.  It’s been an interesting week, and now that we have pulled back 9 cents off of yesterday’s 5 month high’s the question is whether the party is over or we are in the midst of a healthy correction.