Morgan Stanley Coffee Report

An encouraging start to the day with a 145 point rally aided along by a constructive technical close on Tuesday and abetted by confidence instilled as crude oil prices rallied to above $45 a barrel for the first time since November of last year.  In a market that has become accustomed to trading in sync with the CRB it was steady as she goes, that is until KC open interest was released which showed a drop of 1,475 lots proving yesterday’s rally to be a blip of short covering rather than value inspired conviction and that was all she wrote.  Prices traded vacuously lower from 127-12170, with downside accelerating once the morning low of 12535 was breached, and briefly pausing at 123 to fruitlessly gather composure.  When all was said and done every low since the April 8th low of 12110 was taken out and lest one finds a silver lining, the settlement was the lowest since the 7th of March.  Industry notably quiet and origin stands aside while specs get chopped up in the meantime.  Following an encouraging 385 point pop off of Monday’s low’s today’s outside reversal demonstrates that absent fundamental encouragement coffee continues to climb a wall of worry.