Arabica (KC) Biennial Cycle Readthrough | 2026 OutlookCoffee C FuturesICEUS_DLY:KC1!mdquang901) Where we are in the cycle Arabica production is structurally biennial: a high-yield On-Year is typically followed by a lower-yield Off-Year. With 2025 labeled as an On-Year, 2026 should be an Off-Year in the agronomic cycle. In normal conditions, this would lean supportive for price because yield potential eases and weather risk carries more weight. However, markets trade marginal balance, not the crop label. After a parabolic 2024–2025 run-up, the dominant feature entering 2026 is regime change: from “scarcity / weather premium” to “normalization / liquidation.” 2) Why an Off-Year can still be bearish The 2026 selloff fits a classic post-spike commodity pattern: price collapses first, fundamentals follow later. Even in an Off-Year, KC can decline if: Carry-in inventories built during the 2025 On-Year (or demand slowed at elevated prices), allowing the market to absorb a softer harvest without immediate tightness. Demand destruction/substitution occurred during the prior rally (roasters shift blends, consumers trade down), reducing the urgency to pay scarcity premiums. Weather premium unwinds when worst-case outcomes do not materialize (or the market realizes supply fear was over-priced). Macro headwinds (USD strength, tighter liquidity) pressure high-beta commodities and flatten speculative length. Net: 2026 is less about “tree biology” and more about “positioning + mean reversion after a blow-off.” 3) Structural chart message The yearly structure reads as a super-cycle spike (2024–2025) followed by violent mean reversion (2026). This is consistent with a transition into a wide, two-sided range: The prior highs act as overhead supply (distribution zone). The breakdown year often sets up a basing process rather than a smooth continuation lower. In coffee specifically, the market remains prone to sharp upside repricing on any credible weather threat (frost/drought risk never disappears), which keeps volatility elevated even in “bearish” years. 4) 2026 working thesis: Range + event-driven volatility Base case for 2026: Wide range, not a clean trend. Rallies are likely to be sold first (macro + inventory logic), but dips can trigger fast short-covering on weather headlines. Best edge comes from tactical execution: fade emotional spikes, respect key structural levels, and size for volatility. 5) Key risk factors to monitor (what can flip the script) Bullish catalysts: Confirmed Brazil weather damage during critical windows (frost/drought) that reduces realizable supply. Evidence that certified stocks / exports tighten faster than expected. A softer USD / easier liquidity that re-inflates commodity risk appetite. Bearish catalysts: Continued demand softness at current price levels. Persistent inventory rebuilding / strong export flows. Macro tightening and/or sustained USD strength. 6) Practical trading implications Treat 2026 as post-bubble normalization: avoid marrying a directional narrative. Prefer defined-risk tactics: scale, take partials quickly, and assume large intrayear swings. Bias framework: Sell rallies into overhead supply (until proven otherwise). Buy weather panics selectively, with tight risk and clear invalidation.