KC SPECIALIST · Softs / Supply Fundamentals
Z6514 – [KC] PSD Brazil Arabica Production YoY Signal
Brazilian Arabica production forecast year-over-year captures supply-regime shifts that drive Arabica forward 60-day returns via the systemic supply channel.
At a glance
DORMANT · WAITING FOR JUN
Current reading
+0.778
SEASONAL STATE
DORMANT · WAITING FOR JUN
Signal values ffill forward between USDA PSD annual releases; composite changes on…
Signal state
Supply Tightening
25 days in Healthy phase
Updated
Nov 04, 2026
USDA PSD annual release
Sample
36-year window
Annual cadence; 1990 onward
As of Nov 04, 2026. Updated nightly. · NEXT WINDOW JUNE USDA PSD ANNUAL UPDATE
SIGNAL OVERVIEW
Brazil is the world’s largest Arabica producer. The USDA Production Supply and Distribution database reports Brazilian Arabica production on an annual basis as part of the Coffee World Markets and Trade publication. Year-over-year changes in this forecast are the cleanest systemic supply lens on the Arabica market. The signal reads USDA PSD Brazil Arabica production, computes year-over-year percent change, z-scores on a rolling window, inverts (production surge = bearish), and tanh-bounds. Empirically the raw z-score output tracks positively against Arabica forward 60-day returns. Daily Spearman IC against Arabica forward 60-day returns is plus 0.125 at p-value 2.7e-32 across 8,947 observations, strongly significant on the 36-year sample. Phase plus 1 firings deliver plus 2.04 pp above the plus 2.32 percent baseline. The pattern is non-monotone around Phase 0; the extreme buckets carry the directional information.
LIVE CHART
KC PSD Brazil Arabica Production YoY Signal
What the chart is showing right now. The dark line is the USDA PSD Brazil Arabica production year-over-year z-score, inverted so a production decline reads as a positive composite, tanh- bounded. Positive composite means Brazilian Arabica supply is tightening relative to trend. 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
+0.778 / tanh
STATE
Supply Tightening
PHASE
+1.04
PHASE +1 EDGE
+2.04 pp
PHASE -1 EDGE
-1.25 pp
TODAY’S PLAYBOOK READING
STATE
Extreme Pos
STATE AND HISTORY
Supply Tightening firing at composite +0.778, 25 trading days running in HEALTHY phase. Phase +1 (Supply Tightening) delivers plus 4.36 percent fwd60d / plus 2.04 pp above plus 2.32 percent baseline. Phase -1 (Supply Loose) delivers plus 1.07 percent / minus 1.25 pp below baseline. Daily Spearman IC plus 0.125 at p-value 2.7e-32 strongly significant.
THE SUPPLY MECHANISM
Brazil produces roughly 40 percent of global Arabica. USDA PSD Brazil Arabica production forecast is the cleanest systemic supply read on Arabica. When the forecast falls year-over-year the supply is tightening and KC prices tend to rally over the following quarters; when the forecast rises YoY the supply is loose and KC underperforms.
HOW TO POSITION
Directional supply regime lens for Arabica. Supply Tightening firings flag bullish regimes with Arabica strength following at 60-day horizon. Supply Loose firings flag bearish regimes. Pair with short-lead CHIRPS rainfall, ENSO dipole, and Cecafe realized-price signals for stacked supply conviction.
WHAT THE CHART SHOWS
The composite sits at +0.778 in the Supply Tightening band. USDA PSD Brazil Arabica production forecast ran meaningfully below the trailing YoY trend in the most recent release consistent with supply tightening.
TOP INPUTS FIRING
- Primary composite +0.778 State Supply Tightening, 25 days running in HEALTHY phase.
- USDA PSD Brazil Arabica forecast falling YoY Raw z-score +1.04; USDA PSD Brazil Arabica production forecast ran below the trailing year-over-year trend consistent with Phase +1 Supply Tightening regime.
- Daily IC strongly significant, non-overlap borderline Daily Spearman IC plus 0.125 at p-value 2.7e-32 strongly significant on full distribution. Non-overlap IC plus 0.134 at p-value 0.10 borderline significant on 150 samples.
THE TAKEAWAY
What this means for you today
THE SUPPLY CALL
Composite +0.778, Supply Tightening. USDA PSD Brazil Arabica production forecast ran meaningfully below the trailing year-over-year trend in the most recent release consistent with supply tightening. Signal firing in Supply Tightening bucket for 25 days; forward 60-day edge in Phase +1 historically runs plus 2.04 pp above baseline.
THE EMPIRICAL CONTEXT
Daily IC plus 0.125 at p-value 2.7e-32 strongly significant on 36-year sample. Phase +1 (Supply Tightening) delivers plus 2.04 pp above baseline; Phase -1 (Supply Loose) delivers minus 1.25 pp. 3.29 pp directional spread between Phase +1 and Phase -1 firings.
THE HONEST CAVEAT
Non-overlap IC at 60-day sampling plus 0.134 at p-value 0.10 borderline significant on 150 samples. Phase pattern is non-monotone around Phase 0 (On Trend delivers minus 3.77 pp); extreme buckets carry the directional information not the middle. USDA PSD annual cadence means composite ffills forward between releases.
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 (Supply Tightening) delivers +2.04 pp edge; Phase -1 (Supply Loose) delivers -1.25 pp. 3.29 pp directional spread with daily IC plus 0.125 strongly significant.
| State | Phase | Share | Fwd 60d | HAC t | Edge vs baseline | Last firings |
|---|---|---|---|---|---|---|
| Supply Tightening TODAY | +1 | 45.6% (4082 d) | +4.36% | +2.04pp | 2026 (current), 2021-22, 2014 | |
| On Trend | 0 | 10.0% (895 d) | -1.46% | -3.77pp | various | |
| Supply Loose | -1 | 44.4% (3970 d) | +1.07% | -1.25pp | 2018-19, 2012-13, 1998 |
The historical pattern
Signature episodes in the 36-year sample
What this measures
Z-score of USDA PSD Brazil Arabica production year-over-year percent change, inverted so production decline reads positive composite, tanh-bounded. Positive composite equals production below trend (supply tightening); negative composite equals production above trend (supply loose). Target ICE US Coffee C first-nearby back-adjusted close.
Why it matters
Why USDA PSD Brazil Arabica matters
Brazil produces roughly 40 percent of global Arabica. The USDA Production Supply and Distribution database for Coffee is the cleanest systemic supply read on the Arabica market. Year-over-year changes in the Brazil Arabica production forecast are directly interpretable as supply regime signals. When the forecast falls YoY the supply is tightening; when it rises YoY the supply is loose.
How to use this signal today
Directional supply regime lens for Arabica. Supply Tightening firings flag bullish regimes where Arabica strength historically follows at 60-day horizon; Supply Loose firings flag bearish regimes. Pair with short-lead CHIRPS rainfall, ENSO dipole, and Cecafe realized-price signals for stacked supply conviction. USDA PSD annual cadence makes this a slow-moving anchor rather than a trigger.
Risk overlay
Daily IC strongly significant but non-overlap test (150 independent 60-day samples) plus 0.134 at p-value 0.10 borderline significant. Phase pattern is non-monotone around Phase 0 (On Trend delivers minus 3.77 pp edge); the extreme buckets carry the directional information not the middle. USDA PSD annual cadence means the composite ffills forward between releases.
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 11:30 PM ET