In the early months of 2023, agribusiness held the Brazilian economy together. The sector grew by an astonishing 21.6 percent, the highest quarterly rate in 27 years, offsetting unimpressive industrial production and family consumption figures to push overall GDP growth to 1.9 percent in the first quarter.
Agribusiness has also single-handedly sustained Brazil’s trade surpluses. In May, the sector’s exports reached USD 16.6 billion — up 10 percent from a year earlier. According to Brazil’s Institute of Applied Economic Research (Ipea), the trade balance for agribusiness is up 20 percent year-to-date. For the rest of Brazil’s trade, the increase was only 4 percent.
But the arrival of the El Niño weather phenomenon could put a dent in this upswing by disrupting rainfall patterns — and according to a study by Nature Climate Change, 90 percent of Brazil’s farmland relies on rainwater irrigation.
El Niño occurs when the water of the equatorial region of the Pacific Ocean becomes atypically warm. Because warm water adds extra heat to the air and creates unsettled weather with more clouds in rainfall, this phenomenon impacts the weather globally, affecting large-scale winds and changing temperatures.
Because it is too early to predict how strong El Niño will be in the coming months, experts say it remains uncertain how it will affect specific commodities.
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