KC SPECIALIST · Softs / Ocean-Driven Weather
Z3469 – [KC] ERSST Brazil Offshore SST Signal
Offshore sea-surface temperature anomalies near the Brazilian coffee coast drive moisture advection to inland coffee regions and lead Arabica forward 60-day returns via the ocean-climate channel.
At a glance
IN-SEASON · ACTIVE
Current reading
-0.632
SEASONAL STATE
IN-SEASON · ACTIVE
NOAA ERSSTv5 monthly release drives signal refresh.
Signal state
Cold SST Anomaly
110 days in Stress phase
Updated
Nov 04, 2026
NOAA ERSSTv5 monthly release
Sample
36-year window
Monthly cadence; 1990 onward
As of Nov 04, 2026. Updated nightly.
SIGNAL OVERVIEW
Sea-surface temperatures along the Brazilian coffee coast drive moisture advection patterns into the inland coffee-growing regions. Warm SST anomalies increase evaporation and support wetter conditions over Cerrado and Sul-Minas coffee belts; cold anomalies reduce advected moisture and support drier conditions. Brazilian Arabica is sensitive via the growing-season moisture channel. Empirically warm anomalies precede Arabica weakness at 60-day horizons and cold anomalies precede strength; the signal is an Atlantic-side ocean-climate overlay complementing Pacific-side ENSO signals.
LIVE CHART
KC ERSST Brazil Offshore SST Signal
What the chart is showing right now. The dark line is the NOAA ERSSTv5 sea-surface temperature anomaly over the Brazil-coffee-offshore region z-scored on a rolling window and tanh- bounded. Positive composite means warm SST anomaly (wetter inland moisture advection, bearish KC via supply support); negative composite means cold SST anomaly (drier conditions, bullish KC). The bronze line in the middle panel is ICE US Coffee C first-nearby. The bottom panel tracks the trailing 252-day Spearman information coefficient between the composite and Arabica forward 60-day returns.
COMPOSITE
-0.632 / tanh
STATE
Cold SST Anomaly
PHASE
-0.74
PHASE +1 EDGE
-0.62 pp
PHASE -1 EDGE
+1.12 pp
TODAY’S PLAYBOOK READING
STATE
Moderate Neg
STATE AND HISTORY
Cold SST Anomaly firing at composite -0.632, 110 trading days running in STRESS phase. Phase +1 (Warm SST Anomaly) delivers plus 1.70 percent fwd60d / minus 0.62 pp below plus 2.32 percent baseline. Phase -1 (Cold SST Anomaly) delivers plus 3.43 percent / plus 1.12 pp above baseline. Daily Spearman IC minus 0.106 at p-value 9.3e-24 strongly significant.
THE OCEAN-CLIMATE MECHANISM
Sea-surface temperatures along the Brazilian coffee coast drive moisture advection patterns into inland coffee regions. Warm SST anomalies increase evaporation and generally support wetter conditions over the Cerrado and Sul-Minas coffee belts; cold SST anomalies reduce advected moisture and support drier conditions. Arabica is sensitive via the supply response to growing-season moisture.
HOW TO POSITION
Ocean-climate overlay for Arabica. Warm SST Anomaly firings flag bearish regimes where wetter inland moisture supports production over 60-day horizons. Cold SST Anomaly firings flag bullish regimes where drier conditions tighten supply. Pair with CHIRPS Brazil rainfall, ENSO dipole, USDA PSD Brazil Arabica for stacked ocean-plus-rainfall-plus-supply conviction.
WHAT THE CHART SHOWS
The composite sits at -0.632 in the Cold SST Anomaly band. NOAA ERSSTv5 Brazil-coffee-offshore SST has run below the rolling z-score mean through 2026 and Arabica forward 60-day returns historically run above baseline in this regime.
TOP INPUTS FIRING
- Primary composite -0.632 State Cold SST Anomaly, 110 days running in STRESS phase.
- Brazil-coffee-offshore SST below rolling norm Raw z-score -0.74; NOAA ERSSTv5 SST anomaly over the Brazil coffee coast has run below the rolling mean through 2026 consistent with cold-anomaly regime.
- Daily IC strongly significant, non-overlap not independent Daily Spearman IC minus 0.106 at p-value 9.3e-24 strongly significant on full distribution. Non-overlap IC minus 0.086 at p-value 0.30 not independently significant on 150 samples.
THE TAKEAWAY
What this means for you today
THE OCEAN CALL
Composite -0.632, Cold SST Anomaly. NOAA ERSSTv5 Brazil-coffee-offshore SST has run below the rolling z-score mean through 2026 consistent with cold-anomaly regime that historically supports Arabica strength. Signal firing in Cold SST Anomaly bucket for 110 days; forward 60-day edge in Phase -1 historically runs plus 1.12 pp above baseline.
THE EMPIRICAL CONTEXT
Daily IC minus 0.106 at p-value 9.3e-24 strongly significant on 36-year sample. Phase +1 (Warm SST Anomaly) delivers minus 0.62 pp below baseline; Phase -1 (Cold SST Anomaly) delivers plus 1.12 pp. 1.74 pp directional spread.
THE HONEST CAVEAT
Non-overlap IC at 60-day sampling minus 0.086 at p-value 0.30 not independently significant on 150 samples. Phase 0 (On Trend) sample share is small (14.9 percent) and its edge is minus 1.67 pp, meaning the signal spends 85 percent of the sample in an extreme bucket. Treat as ocean-climate overlay not standalone trigger.
THE REGIME MAP
The three phases, forward returns and sample share
Computed from 8,947 post-warmup trading days (1990 onward). Baseline Arabica fwd60d mean plus 2.32 percent. Phase +1 (Warm SST Anomaly) delivers -0.62 pp edge; Phase -1 (Cold SST Anomaly) delivers +1.12 pp. 1.74 pp directional spread with daily IC minus 0.106 strongly significant.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Warm SST Anomaly | +1 | 40.5% (3623 d) | +1.70% | -0.62pp | 2016, 1998, 2010 | |
| On Trend | 0 | 14.9% (1334 d) | +0.65% | -1.67pp | various | |
| Cold SST Anomaly TODAY | -1 | 44.6% (3990 d) | +3.43% | +1.12pp | 2026 (current), 2021-22, 2014 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
Z-score of NOAA ERSSTv5 sea-surface temperature anomaly over the Brazil-coffee-offshore region on a rolling window, tanh-bounded. Positive composite equals warm SST anomaly (wetter inland moisture advection, bearish KC via supply support); negative composite equals cold SST anomaly (drier conditions, bullish KC). Target ICE US Coffee C first-nearby back-adjusted close.
Why it matters
Why offshore Brazil SST matters for Arabica
Sea-surface temperatures along the Brazilian coffee coast drive moisture advection patterns into inland coffee regions. Warm SST anomalies increase evaporation from the ocean surface and generally support wetter conditions over the Cerrado and Sul-Minas coffee belts via coastal moisture advection; cold SST anomalies reduce advected moisture and support drier conditions. Arabica is sensitive to this ocean-climate channel because the coffee belts draw their growing-season moisture partly from Atlantic-sourced weather systems.
How to use this signal today
Ocean-climate overlay for Arabica positioning. Warm SST Anomaly firings flag bearish regimes where wetter inland moisture advection supports production over 60-day horizons; Cold SST Anomaly firings flag bullish regimes where drier conditions tighten supply. Pair with CHIRPS Brazil rainfall (direct moisture measurement), ENSO dipole (Pacific weather regime), and USDA PSD Brazil Arabica (systemic supply) for stacked ocean-plus-rainfall-plus-supply conviction.
Risk overlay
Daily IC strongly significant but non-overlap test (150 independent 60-day samples) minus 0.086 at p-value 0.30 not independently significant. Spread is modest at 1.74 pp. Signal captures ocean- climate channel which is a slow-lead supply-condition proxy not a short-horizon trigger. Polarity is contrarian relative to the stated engine convention; positive SST = wetter = bearish via supply response.
Signal consumers and siblings
Not investment advice · The analysis on this page is informational and educational. Signal readings, historical case figures, and empirical statistics are derived from publicly available data and are provided without warranty. Hypothetical performance results have inherent limitations, including the benefit of hindsight. Readers who intend to trade should consult a licensed investment professional and see the research brief for the full disclaimer.
Last refreshed Nov 06, 2026 02:30 AM ET