Record Brazil heat pressures crops, energy prices, government
Those prices could trickle down to energy bills for customers and factories - a threat to economic growth already expected to be just 2 percent this year.
"I am very worried (about the weather) and I have been for the last month," said Jose Francisco de Lima Gonçalves, chief economist with Banco Fator in São Paulo. "It's a risky outlook without a doubt - it could affect industry."
Massive Cattle Deaths
Other regions of Brazil are also suffering from extreme weather. The impoverished, less populated northeast is in its worst drought in at least 50 years, according to Funceme, the state meteorological agency in Ceará state. Hundreds of thousands of cattle have died from the dry conditions, local officials say.
"I have never seen a drought like this. Everything has dried up," said 85-year-old Ulisses de Sousa Ferraz, a farmer in Pernambuco state who said he has lost 50 cows.
There is some good news. Electricity shortages do not appear likely for now, nor does rationing, which took a huge bite out of Brazil's gross domestic product in 2001.
Average reservoir levels in the southeast and central-west regions, which account for 70 percent of Brazil's hydroelectric generation, fell in late January to 41 percent. That was well below the 58 percent average for January since 2000 but ahead of the 37.46 percent level seen in 2013, when fears of power rationing last flared. Before the government ordered power rationing in 2001, reservoirs had fallen to 31.4 percent.
A post on President Rousseff's Facebook page on Friday said that because of federal investments in electrical supply over the past decade, the risk of shortages had "disappeared."
Water shortages seem to be a bigger risk.
The leading water company in São Paulo, a metropolitan area of about 20 million people, is already running TV and radio ads asking customers to limit water use by not cleaning sidewalks with hoses, for example. Reports of isolated water shortages in poorer areas have also surfaced in local media.
"São Paulo has a significant risk of water rationing," Somar's Oliveira said.
Economists are watching closely because problems here tend to bleed quickly into the national economy. São Paulo state accounts for a fourth of Brazil's population and a third of its GDP. Several key local industries from cellulose to beer and soda production use large amounts of water.
Farmers in the world's leading exporter of soybeans, coffee, orange juice, sugar and beef are worried too, though they say it is too early to talk about any serious losses.
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