Morgan Stanley Report- April 15,2016

An appropriately quiet end to the week in both coffee markets with such large events looming over the weekend.  Brazil’s Central Bank continued to pressure the rampaging currency, offering another 40,000 reverse FX swaps today in an auction that at the time of writing was poorly subscribed.  With historic offerings this week, it appears BRL appetite has reached its zenith, at least for the moment.  A marathon session at the Brazilian Supreme Court wrapped up after midnight this morning with the status quo being upheld as 8 of 10 justices allowed Sunday’s impeachment vote to move forward.  Local papers are projecting a narrow passage by the 342 lower house members required to move the impeachment process into the Senate, though certainty remains low.  BCB President Tombini was in NY to attend IMF meetings, where he stated that there was “no room for accommodative measures” by the central bank with regards to inflation, as external accounts improve with the BRL.  S&P projected a further decline in GDP for the nation in 2016, lowering its estimate to -3.6% before rebounding in 2017 to +0.5%, itself a mitigation of expectations as their previous number had been +1%.  With so much focus on Brazilian politics, it is important to remember the Doha meetings of top oil producers are going on as well, particularly given this year’s correlation between the markets.  If news emerges by Sunday afternoon that drives the commodity markets in unison it would not be a surprise.  Add in the approaching First Notice Day and the ongoing weather risks in Vietnam, and it seems unlikely this week’s summer-like trading continues into the next.  GCA Stocks for March increase by 159,691 to 6+ million bags.
COT Net non-commercial position came in below expectations (+2376).