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March 27, 2014

Predicted El Nino would have Mixed Impact in Brazil

The chances of an El Nino developing in the Pacific Ocean seem to be increasing according to many meteorologists. The warming of the waters in the eastern Pacific can have a significant impact on agriculture in South America. Generally an El Nino results in heavier than normal rains in southern Brazil and parts of Argentina. The potential increased moisture would be good for the safrinha corn and soybean crops, but it could be harmful for sugarcane, coffee, and orange production.

If El Nino induced rains in Brazil would develop by June or July, it would be beneficial for the later developing safrinha corn and soybeans. The problem for safrinha corn production in Brazil is usually a scarcity of moisture during the final stages of grain filling. The safrinha corn in Mato Grosso will be filling grain and maturing during June and the safrinha corn in Parana will be doing the same during July and early August.

Farmers in Brazil this year have also planted a significant amount of safrinha soybeans to take advantage of the strong soybean price. The Brazilian Institute of Geography and Statistics (IBGE) estimates that farmers have planted 745,000 hectares of safrinha soybeans which will be filling pods and maturing during May and June. These soybeans will need to be harvested before June 15th in order to adhere to the 90-day soybean free period which starts June 15th.

For sugarcane production the prediction of heavier than normal rainfall especially later in 2014 is not good news. Expectations for the sugarcane crop have already been lowered due to slow growth of the cane during the hottest and driest summer ever recorded in parts of southeastern Brazil. If there would be heavier than normal rainfall during the last half of the harvest season (August to December), additional losses could be expected.

Too much rainfall during harvest can keep the harvesters out of the fields and it also lowers the sucrose content of the sugarcane. Both of these can result in reduced tonnage and reduced sugar and ethanol production. During the last harvest season, producers in southern Brazil processed 595 million tons of sugarcane, but the sugarcane tonnage this harvest season is expected to decline by 25 million tons or more.

For coffee and oranges, heavier than normal rainfall during the traditional harvest season could impeded harvest activities and result in poorer quality crops.

It's not all bad news though. If the predicted heavier than normal rains would continue into the Southern Hemisphere's spring and early summer, that would be beneficial for the 2014/15 summer crops in Brazil which are planted starting in August and September.

While heavier than normal rains could be problematic for some crops, it would be welcomed by the energy sector in Brazil. The dry summer weather has resulted in water rationing and the fear of electrical shortages due to low water levels in the country's numerous hydroelectric dams. Many reservoirs are at a fraction of their normal capacity and they will only be fully refilled with a long term sustained period of significant rainfall.