Record Brazil heat pressures crops, energy prices, government
Yields from the 2014/15 coffee crop, which is forming fruit and will be collected starting in May in the southeastern states of Minas Gerais and São Paulo, were probably hurt by dry weather in January, according to the PROCAFE Foundation, an industry group. Concerns over the lack of rain have kept Arabica prices in check even allowing for a large global coffee surplus.
The region's sugarcane crop is less at risk, having just ended harvest, but could suffer if the dry weather lasts for long.
The drought is also apt to diminish yields on the current orange crop, but it is too soon to say how this might affect Brazil's juice production, said Eduardo Savanachi, spokesman for industry group CitrusBR.
Finally, there's political risk.
Ever since antigovernment street protests broke out across Brazil last year, problems with the country's infrastructure have become heavily politicized.
So if there are water shortages, for example, they are likely to be used against incumbents in the upcoming election as evidence that federal and state governments have not invested enough in new sources of drinking water.
Rousseff is running for reelection in October, as is São Paulo Governor Geraldo Alckmin of the opposition PSDB Party.
"We need to watch it all closely, considering how unlucky this government is," said Andre Perfeito, chief economist at Gradual Investimentos in São Paulo.
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