Morgan Stanley Coffee Report

And the beat played on, as the real strengthened to its firmest level ($/r 3.1935) since election day which aided Arabica prices to trade a one month high, while London failed to go along for the ride.  Open interest in the January London contract stands at 2,748 lots with zero notices issued to date.  A one month high and fifth day of higher highs in N.Y., a pattern last seen in early June when the market rallied from 12280-14685 and posted a series of 6 higher highs. The 3/8 Fibonacci retracement of the move from November 8ths high of 17955 to last week’s low of 13285 comes in at 150.50, the next logical level of resistance.  Brazil a bit more visible today, as a 3% rally in the currency accompanies and triggers a 9% “C” market rally.  Industry appear comfortably covered and are not pressed to chase the market higher. Open interest falling by 1,540 lots on yesterday’s rally suggest the current move has been a text book technically inspired short covering rally.  Background stories circulate about dryness in Conilon regions of Brazil, yet with forecasts calling for some relief to the dryness next week  the action in London is more suggestive of patience than alarm.   .