January 1, 2013

Northeastern Brazil Continues to be Impacted by Dry Weather

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Regions of northeastern Brazil continue to be in the grip of one of the worst droughts in forty years. Parts of the area received some rainfall during November after months of no rainfall whatsoever, but the rainfall during December was once again much below normal. The states of Bahia and Minas Gerais are the two largest states in the region and they are significant producers of soybeans, cotton, corn, coffee, and cashews.

Bahia produces approximately 4.5% of Brazil's soybeans, 3% of its corn, and 30% of the cotton grown in Brazil. The state of Minas Gerais producers approximately 4% of Brazil's soybeans, 10% of its corn, and 2% of the cotton grown in Brail.

Farmers in western Bahia took advantage of the rainfall during November to plant their summer crops of soybeans, corn, and cotton, but the weather since planting has not been conducive to normal crop development. According to the president of the Agriculture and Livestock Federation of the State of Bahia (Faeb) Joao Martins, the situation has improved significantly, but if the rainfall doesn't pick up in the next few weeks, the situation could become critical once again. The rainfall has been better in western, southwestern, and eastern Bahia than it has been in central and northern Bahia where very rain has fallen.

In addition to concerns over row crop production, the drought has taken a toll on livestock, fruit production, and tree crops. Milk production in the state has fallen 80% due to a lack of forage for the dairy cattle. Bahia is the fourth largest coffee producer in Brazil and production is expected to be down by one third this year.

Cashew production is also expected to be just a fraction of normal due to the drought. Cashew production in the state is expected to fall 70% below the 50,000 tons produced during a normal year. The reduced production means less work for the 150,000 workers normally employed during the harvest season. Many industries in the state are also involved in processing and exporting cashews, but since production is so low, companies are importing raw nuts from Africa to keep their operations ongoing. Since 2010, companies in the state have imported 40,000 tons of cashews from Africa to supplement the domestic production.

In the entire northeastern region of Brazil, the federal government estimates that 1,300 municipalities continue to be in a state of emergency, which is impacting 10.3 million Brazilians. The secretary of research and development for the Ministry of Science, Technology, and Innovation, Carlos Nobre, predicts that there is a 75% probability that rainfall during the remainder of the summer months will be average or below average. If his prediction turns out to be accurate, then row crop production in Bahia and northern Minas Gerais could be significantly impacted.