Morgan Stanley Commentary for January 21, 2016

A greener day in the macro environment following Wednesday’s session which sent equities and commodities tumbling alike. Coffee opened up unchanged  and captured a 3 cent tailwind finding willing buyers at 2 years low, especially after the open interest was released which showed an increase of 5,753 lots on yesterday’s 4 cent sell off. The real proceeded to sink to a four month low after a surprise decision to keep interest rates unchanged fueled concerns about central bank independence  and the perception of bowing to political pressures while prioritizing economic growth over taming inflation. Despite the real trading to a 4 month low, coffee was able to maintain its gains ultimately recouping 280 points of Wednesday’s 405 point sell off by settlement. A decent performance on the day, but an inside session one day after posting 2 year lows places the bar for performance rather low.  Certified stocks fell by another 26,640 bags to 1,635,139 bags a drop
of 200,000 bags since the beginning of December which is duly noted but to date not proving price sensitive to the outrights or spreads. NY volume 31,829 with 10,145 spreads. London 21,655 with 7,454 spreads.