KC SPECIALIST · Softs / Brazil Drought
Z4332 – [KC] CHIRPS Brazil Cerrado Drought Signal
CHIRPS satellite precipitation over the Brazil Cerrado coffee belt (Goias and Minas tablelands), inverted as a drought lens for Arabica supply.
At a glance
DORMANT · WAITING FOR MAY
Current reading
+0.634
SEASONAL STATE
DORMANT · WAITING FOR MAY
Cerrado dry-season window closed
Signal state
Cerrado Drought
129 days in Healthy phase
Updated
Nov 04, 2026
Daily CHIRPS satellite
Sample
35-year window
Daily cadence; 1990-12 onward
As of Nov 04, 2026. Updated nightly. · NEXT WINDOW MAY 2027
SIGNAL OVERVIEW
Brazil Cerrado (Goias plus Minas tableland arabica belt) complements Sul-Minas as the second-tier Arabica growing region. Cerrado sits at lower altitude than Sul-Minas and is correspondingly more drought-sensitive; when rainfall runs below trend during the dry season or flowering window, cherry development stalls and yield drops. The signal reads CHIRPS satellite precipitation over the Cerrado region on a 30-day trailing basis, inverts so drought reads as positive composite, and tanh-bounds. Positive composite equals drought stress equals bullish Arabica setup. Daily Spearman IC against Arabica forward 60-day returns is plus 0.028 at p-value 0.008 across 8,947 observations; Phase +1 drought firings deliver a plus 0.38 pp edge above baseline across 4,494 trading days. Monotone but modest phase pattern. Full regime stats and historical case episodes below.
LIVE CHART
KC CHIRPS Brazil Cerrado Drought Signal
What the chart is showing right now. The dark line is 30-day trailing CHIRPS satellite precipitation over the Brazil Cerrado coffee belt, inverted so drought reads as positive and bounded to plus or minus one. Positive composite means Cerrado rainfall is running below trend (drought regime, bullish Arabica via yield stress). 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
+0.634 / tanh
STATE
Cerrado Drought
PHASE
+0.75
DAILY IC
+0.028 (p = 0.008)
PHASE SPREAD
0.83 pp
TODAY’S PLAYBOOK READING
STATE
Extreme Pos
STATE AND HISTORY
Cerrado Drought firing at composite +0.634, 129 trading days running in the HEALTHY phase. Phase +1 (Cerrado Drought) delivers plus 2.70 percent fwd60d / plus 0.38 pp above plus 2.32 pct baseline across 4,494 days. Phase -1 (Cerrado Wet) delivers plus 1.86 percent / minus 0.46 pp below baseline across 2,979 days. Daily IC plus 0.028 at p = 0.008. Non-overlap rho plus 0.040 at p = 0.63 across 150 samples; not independently significant.
THE CHIRPS MECHANISM
CHIRPS is a satellite-plus-station precipitation dataset that estimates daily rainfall globally at 0.05-degree resolution. The 30-day trailing average smooths daily satellite noise while preserving drought-regime sensitivity. Cerrado (Goias plus Minas tablelands) is the lower-altitude sister region to Sul-Minas and is more drought-sensitive due to shallower soil water storage. Inverting the precipitation signal so drought reads positive aligns with the bullish-KC polarity.
HOW TO POSITION
Short-to-medium-lead drought read on Arabica (1-2 months). Cerrado Drought firings (composite above plus 0.5) historically coincide with Brazilian drought episodes affecting the second-tier Arabica belt. Pair with the TERRACLIMATE water-deficit signal (medium-lead PET-AET lens), the ENSO signal (long-lead ocean forcing), and the Cecafe realized-price signal (short-lead transaction confirmation).
WHAT THE CHART SHOWS
The composite sits at +0.634 in the Cerrado Drought band. CHIRPS 30-day trailing precipitation over Goias and Minas tablelands has run below trend through 2026. The current HEALTHY episode began May 2026 and has run 129 trading days.
TOP INPUTS FIRING
- Primary composite +0.634 State Cerrado Drought, 129 days running in HEALTHY phase.
- CHIRPS Cerrado precipitation below trend CHIRPS 30-day trailing precipitation over Goias and Minas tablelands has run negative through 2026; inverted composite deep in Phase +1 territory.
- Non-overlap test not independently significant (honest caveat) Non-overlap IC at 60-day sampling delivers rho plus 0.040 with p-value 0.63 across 150 samples; sign- consistent with daily IC plus 0.028 but not independently significant.
THE TAKEAWAY
What this means for you today
THE DROUGHT CALL
Composite +0.634, Cerrado Drought. CHIRPS 30-day trailing precipitation over Goias and Minas tablelands has run significantly below trend. Signal firing in the Cerrado Drought bucket for 129 days; forward 60-day edge in Phase +1 historically runs plus 0.38 pp above baseline.
THE EMPIRICAL CONTEXT
Phase pattern is monotone. Phase +1 (Cerrado Drought) delivers plus 0.38 pp above baseline; Phase 0 (Near Trend) delivers minus 0.22 pp; Phase -1 (Cerrado Wet) delivers minus 0.46 pp. 0.83 pp directional spread; monotone across phases but economically modest magnitude.
THE HONEST CAVEAT
Non-overlap test at 60-day sampling delivers rho plus 0.040 with p-value 0.63 across 150 samples; sign-consistent with daily IC but not independently significant. The directional spread (0.83 pp) is modest compared to ENSO (3.46 pp) or Cross-Soft Basket (3.97 pp). Use as part of a stacked drought- regime view, not standalone.
THE REGIME MAP
The three phases, forward returns and sample share
Computed from 9,007 post-warmup trading days (1990-12-03 onward). Baseline Arabica fwd60d: mean plus 2.32 percent (median minus 0.96 percent). Phase +1 (Cerrado Drought) delivers +0.38 pp edge; Phase 0 delivers -0.22 pp; Phase -1 (Cerrado Wet) delivers -0.46 pp. 0.83 pp directional spread.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Cerrado Drought TODAY | +1 | 49.9% (4494 d) | +2.70% | +0.38pp | 2026 (current), 2024, 2021 | |
| Near Trend | 0 | 17.0% (1534 d) | +2.10% | -0.22pp | 2023, 2017, 2013 | |
| Cerrado Wet | -1 | 33.1% (2979 d) | +1.86% | -0.46pp | 2022, 2019, 2009 |
The historical pattern
Signature episodes in the 35-year sample
What this measures
30-day trailing CHIRPS satellite precipitation over the Brazil Cerrado coffee region (Goias plus Minas tablelands), inverted so drought reads as positive composite, and tanh-bounded. Positive composite equals precipitation below trend (drought stress); negative composite equals above trend (wet).
Why it matters
Why Cerrado CHIRPS reads Arabica yield
Brazil produces roughly 35 percent of world Arabica, concentrated in Sul-Minas and Cerrado (Goias plus Minas tableland regions). Cerrado sits at lower altitude than Sul-Minas and is correspondingly more drought-sensitive due to shallower soil-water storage. When CHIRPS satellite precipitation runs below trend over Cerrado during the May-September dry season or flowering window, yield stress follows within 1-2 months. The signal inverts so drought reads as positive composite.
How to use this signal today
Short-to-medium-lead drought read on Arabica. Cerrado Drought firings historically coincide with Brazilian drought episodes affecting the second-tier belt. Pair with TERRACLIMATE water-deficit (PET-AET lens), the ENSO signal (long-lead ocean forcing), and Cecafe realized-price (short-lead transaction confirmation). This signal complements Sul-Minas-focused signals by covering the second-tier Cerrado belt.
Risk overlay
Validation rests on daily Spearman IC plus 0.028 (p-value 0.008, N = 8,947) with sign-consistent non-overlap test at 60-day sampling (p-value 0.63, not independently significant). 0.83 pp directional spread; monotone but modest. Primary risks are (a) the modest directional magnitude limits standalone use, (b) daily CHIRPS satellite data has small retrieval noise, and (c) Cerrado-only lens misses Sul-Minas-specific supply shocks.
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 05, 2026 06:30 PM ET