Brazil Drought Boosts Coffee Prices, Threatens Sugar Production

October 14, 2014

Brianna Lee – International Business Times, 10/13/2014

A deepening drought crisis across Brazil is hitting two of the country’s largest exports as coffee prices surged to their highest level in two years and sugar production is headed for a steep decline. The drought affecting Brazil this year is the worst the country has faced in decades, triggering alarm for cities like Sao Paulo, which has instituted emergency measures to cope with a water supply crisis.

The price of Arabica coffee, of which Brazil is the world’s top supplier, soared to a two-year high last week as meteorologists predicted low prospects for rainfall in Brazil’s coffee-producing regions for the rest of October and November.

Brazil joins other Central American countries dealing with coffee crop woes as El Salvador, Honduras, Panama and Guatemala have all dealt not only with drought but also coffee rust, a fungus that hit crops and resulted in the loss of more than $1 billion since 2011. Meanwhile, however, Colombian coffee seems to be taking advantage of the situation. Colombia’s coffee output looks set to reach a 20-year high this year.

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Brazil’s Biggest City Is Running Dry

September 25, 2014

Mac Margolis – Bloomberg, 09/24/2014

God, the natives like to say, is Brazilian. So with the country weathering its worst drought in decades, it’s no surprise that officials in the worst-hit regions are pleading force majeure. Geraldo Alckmin, governor of water-stressed Sao Paulo, chalked up the emptying reservoirs to “exceptional” and “unimaginable” drought.

But Saint Peter, the national patron saint of rain, gets a bum rap. The great Brazilian dry spell is as predictable as Sunday mass, and this year’s is no exception. Sao Paulo owes its skyline in large part to the hands of men and women who fled the parched backlands of the northeast to become bricklayers and steelworkers in the country’s biggest metropolis. One of them was Luiz Inacio Lula da Silva, who wet his whistle with politics and became a rebel union leader and then president.

Now the problem has migrated, too. Sao Paulo, the nation’s most prosperous state, is facing its worst dry snap in four generations. Last week, the water level in the region’s biggest reservoir, the Cantareira complex, dropped to just 8 percent. The state sanitation authority, Sabesp, is offering fat discounts to consumers who slash their yearly water use by at least 20 percent. Dozens of cities are already rationing water.

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Coffee experts fear for Brazil harvest

September 17, 2014

Emiko Terazono – Financial Times, 09/07/2014

Divining the health of branches, floral buds and roots of coffee trees in Brazil has become key to millions of dollars being made or lost after a devastating drought hit the country at the start of the year. Recent discussions among roasters, analysts and hedge fund managers have focused on coffee agronomy, says Keith Flury, head of research at Volcafe, the coffee division of commodities traders ED & F Man.

“Given the unprecedented drought, industry and trade have had to increase knowledge about moisture deficits and the impacts on plants,” he says.

Brazil is the largest coffee producer in the world, accounting for about 35 per cent of all output. In the past, the main weather problems for the country’s coffee growers have been frosts – few farmers and traders have had to deal with the consequences of heat and dryness.

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Brazil Coffee Output Set for Longest Decline Since 1965

August 28, 2014

Marvin G. Perez and Morgane Lapeyre – Bloomberg, 8/28/2014

A prolonged drought in Brazil has already claimed about half of Jose Francisco Pereira’s coffee crop. Next year could be even worse as the country heads for the first three-year output decline since 1965.

“Everybody is praying for rain,” said Pereira, general director of Monte Alegre Coffees, a grower with 2,500 hectares (6,280 acres) based in Alfenas, Minas Gerais, that forecast this season’s harvest at 45,000 bags, down from 82,000 last year.

Production in Brazil, the world’s top grower, may drop as much as 18 percent to 40.1 million bags when the harvest ends next month, the National Coffee Council estimates, after a 3.1 percent slide last year. With damage worsening before the start of spring in the Southern Hemisphere, the council said farmers may collect less than 40 million bags in 2015, creating the longest slump in five decades.

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Severe drought plagues northeast Brazil

July 22, 2013

Associated Press – Al Jazeera, 07/22/2013

Fresh water is among the most urgently needed daily necessities in northeast Brazil, where locals are suffering from a severe drought rarely seen in about 50 years.

Some areas in the drought-stricken northeast region have received no rain in more than one year. More than 400,000 households are facing fresh water shortage.

Water vendors have always been very popular among local residents in Marcolandia, a city in the state of Pernambuco, northeast Brazil. There is no fresh water supply system or water well in the city where people get water from tanks carried by donkeys.

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Rousseff deepens Brazil power costs cuts as inflation accelerates

January 24, 2013

Raymond Collitt – Bloomberg, 01/23/2013

Brazil will lower energy costs this year more than the government previously announced and made the cuts effective today as part of an effort to slow inflation that has remained above the central bank’s target since August 2010.

“Beyond anticipating the enforcement of the new rates, the cut is bigger than previously announced,” President Dilma Rousseff said in a nationally-televised address yesterday.

The president said the cuts that go into effect today rather than early next month will pare consumers’ power costs 18 percent and those for industry by 32 percent compared to the reductions of 16.2 percent and 28 percent she had announced in September.

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Rains bring some relief to depleted reservoirs of Brazil’s hydroelectric plants

January 16, 2013

The Washington Post/AP, 01/15/2013

Recent rains have brought some relief to the depleted reservoirs of Brazil’s hydroelectric plants but have done little to dispel concerns over the country’s ability to fulfill its energy demands for the year.

A hotter than usual summer and lack of rain have caused water levels at hydroelectric dams in most of the country to drop to a third of their capacity. The levels are similar to those registered in 2001, when rationing was imposed and blackouts occurred.

The government has said Brazil will not resort to energy rationing because the country has thermal power plants that can be activated.

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