Brazil’s Drought has a Massive Impact on Agricultural Commodities

Drought and heavy frost in Brazil are the worst so far in the last century. Consequently, it has a direct impact on agricultural commodities. 

Brazil’s Drought 2021

The recent report from Brazil’s government agencies confirms that the prolonged dry conditions have resulted in the current situation in central and southern Brazil- the worst drought. Accordingly, it also has a significant role in crop loss, water scarcity, Pantanal wetlands, and increased fire in the Amazon forest. Also, the low water levels in the major rivers will disrupt cargo ship traffic in the basin. In turn, all these factors will make the transportation of goods more expensive.

Brazil Drought 2021’s Effect on Agriculture 

Important Brazil crops such as coffee, corn, sugarcane and oranges took a significant blow. The recent forecasts have predicted that the yield of corn highly likely hit a five-year low. On the other hand, coffee production will drop by 20-30% in São Paulo. Further, the exceptionally low rainfall has reflected on soil moisture and groundwater levels, thus hindering overall agriculture. 

Major Frost Further Derailing Agriculture in Brazil 

The previous week, the main Brazilian sugar and grain-producing regions suffered a major frost. Consequently, the frost has impacted the harvest of yellow corn and GMO soybeans. Further, the recent announcement that major Frost has affected the sugarcane production has put pressure on the sugar market as well. 

Brazil’s National Water and Basic Sanitation Agency (ANA) has confirmed the shortage of water resources in the Paraná River basin from June to November 2021. Also, the electricity prices have skyrocketed, thus stopping production in the mill. Owing to the drought and frost, the prices for agricultural commodities will be exorbitant in the second half. Also, the market is hit, thereby affecting Brazil’s economy. 

Know more about the current situation in Brazil using the links below