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February 4, 2014

Cities in Southern Brazil endure Record High January Temps

The month of January will go into the record books as one of the hottest month ever recorded for many cities in southern Brazil including Sao Paulo, Rio de Janeiro, Curitiba (the capital of Parana), Florianopolis (the capital of Santa Catarina), and Porto Alegre (the capital of Rio Grande do Sul). A persistent high pressure dome has been positioned over the region since late December and it is expected to remain there for at least another two weeks. In addition to the high temperatures, the region has experienced very little rainfall during January, which is normally a very rainy month, and low relatively humidity. Last weekend, the relatively humidity dropped to 15% in parts of the region resulting in health alerts.

As far as row crops are concerned, the full-season corn has probably been the crop most impacted by the hot and dry conditions. The state of Minas Gerais has the most full-season corn acreage in Brazil and there have been numerous reports of significant moisture stress impacting the corn crop in the state. The full-season corn crops in Sao Paulo and northern Parana have also suffered under the adverse conditions.

Sugarcane production in southern Brazil has also been impacted by the dry weather. The state of Sao Paulo is the leading producer of sugarcane in Brazil responsible for approximately 55% of all of Brazil's sugarcane production. The sugarcane producing areas of Minas Gerais, which is just north of Sao Paulo, has been impacted as well as the sugarcane producing region in northern Parana. It's still too early to say how much of an impact there will be on the sugarcane crop and we should get a better idea when the sugarcane harvest begins in a month or two.

While the situation is very worrisome for farmers and residents, it is actually good news for port operations along the southeastern coast of Brazil. At the ports of Santos and Paranagua, which are the two leading grain ports in Brazil, loading operations are halted during periods of rainfall resulting in congestion at the ports and long lines of vessels waiting to load. The soybean export season is just getting underway and at least for the time being, the lack of precipitation should aid early soybean shipments.

There are also concerns about future electrical generation in southern Brazil due to low levels of the reservoirs at the hydroelectric dams and little chance that the water levels will rebound yet this rainy season.