Dry weather damages Brazil's crop

Keyword:
Publish time: 4th February, 2014      Source: www.cnchemicals.com
Information collection and data processing:  CCM     For more information, please contact us
   


February 4, 2014

   

   

Dry weather damages Brazil''s crop

   

   

   

Due to prolonged dry period and high temperatures, Brazil is facing surging power prices and crop damage, complicating efforts to rein in inflation.

   

   

A benchmark electricity price rose to a record today as a lack of rainfall during the traditional wet season drives down hydro-power dam levels. Sugar-cane and coffee output for the 2014-15 crop season is expected to be curbed in the country''s main growing area, according to consultants including Job Economia & Planejamento.

   

   

Costlier electricity and crop disruptions stand to hamper the government''s efforts against above-target inflation. Consumer prices last year rose 5.91%, above the 4.5% target for the fourth-straight year.

   

   

Water reservoirs in the south-eastern and central area are at 40.7% capacity, compared with the 32.9% a year ago, when spots prices also jumped. The difference with last year is that dams started the rainy season in November at low levels and recovered with rains that fell between January and March, according to Rodolfo Salazar, commercial director of electricity trader Bolt Comercializadora.

   

   

While the amount of crops that could be affected is yet to be determined, a lack of rain is expected to reduce agriculture yields, weather forecasting consultant Somar said in an e- mailed statement.

   

   

The growing areas aren''t expecting regular rainfall until the second half of February, it said. Brazil is the world''s largest coffee grower and biggest sugar producer.

   

   

"The dry weather will hurt the crop," Julio Maria Borges, head of Sao Paulo-based industry researcher Job Economia & Planejamento, said in a telephone interview, referring to sugar- cane.

   

   

While Brazil''s coffee growing areas have sufficient soil water from rain in December, this month''s precipitation was 30% to 50% below January''s average historical volume, Commodity Weather Group''s director of agricultural services said.

   

   

As an extended dry spell is forecast for Brazil in February, including the primary growing region in the Centre South, Somar is predicting "certain" crop losses.

   

   

"We don''t see any significant shower activity in the next two weeks," increasing stress on cane, coffee and citrus plants in north-eastern Sao Paulo and southwest Minas Gerais, Joel Widenor, the director of agricultural services at Bethesda, Maryland-based Commodity Weather Group, said in a telephone interview.

   

   

Still, rain in March could help prevent further losses, Michael McDougall, a senior vice president at Newedge Group in New York, said in an e-mailed report.