Macquarie Research reports that, taking its cue from the build-up of certified stocks and a bearish macro outlook, New York Arabica fell to a 12-mth low of 217c/lb in mid-December.
However, fundamental news was bullish, with both the Brazilian and Colombian crops being further downgraded. While retail demand growth for coffee is showing signs of softening in the West, overall global demand is still up on the year.
Macquarie no longer expects a large 2011/2012 Arabica surplus, but more balanced conditions instead.
“With very little stocks at the hands of producers, there is little incentive to sell. Selling is also slow in the Robusta market, despite it being headed firmly to surplus,” Macquarie concluded.