Morgan Stanley Coffee Report

The three day hangover was in effect, exhibited by choppy trading with volume bolstered by several distinct moments through the day, particularly the opening minute and the 11:10 EDT spike just before the lows were recorded.  With the global investing environment proving challenging, as crude fell 5%, global equities suffering, and corn gapping lower into fresh yearly lows, the surprise for many traders was the mid-session hour-long bounce into positive territory.  The catalyst for the weakness appeared to be the 3rd speech in 2 weeks by Bank of England Governor Mark Carney, who warned of “material slowing of the economy.”  Carney concurrently seemed to indicate the likelihood of a mid-month rate cut as he announced a slackening of bank capital requirements, part of the efforts to maintain liquidity in the market.  While other markets struggled, and notable coffee buyers emerged during the settlement period while kc posted a marginal close lower, it appears the coffee rally is not quite prepared to go quietly into the night.