In today’s issue: Climate issues to hamper Brazil’s soybean production. Senate v. Supreme Court: clash put on hold. Poll shows support in Congress for pension reform.


Climate issues to hamper Brazil’s soybean production

Contrary to predictions at the beginning of the 2018/2019 cycle, Brazil’s will not become the world’s leading soybean producer. The Latin American agricultural powerhouse will not even close the gap on the U.S.—which remain as leaders in the production of the commodity. High temperatures in several soybean-producing regions, coupled with irregular rainfall, have led consultancy firms to reduce their predictions.

One such firm, AgRural, has lowered its forecast for a second time—from the initial 121m tons to 112.5m tons. But the drop in production could be even more severe. To some extent, Brazil is experiencing this year what neighbors Argentina went through in the last harvest, when its production—forecast at 55m tons—ended up at only 38m tons.

</p> <p>To make matters worse, Brazilian producers will face a drop in international prices. China is set to buy less in 2019—from 94m tons in the last harvest to 88m. Moreover, U.S. stocks are high. Without selling to China for the better part of 2018, American producers accumulated 25m tons of soybeans in their silos. A third negative factor would be China opening up its market more to the U.S., as part of a negotiated truce to the recent trade wars. It would mean less of a market share for Brazil.</p> <ul> <li><strong>Go deeper:</strong> <a href="https://brazilian.report/money/2019/01/15/commodity-prices-crisis-brazil/" target="_blank" rel="noopener noreferrer"><em>A drop in commodity prices: a looming crisis for Brazil</em></a></li> </ul> <hr /> <h2>Senate <em>v.</em> Supreme Court: clash put on hold</h2> <p>The Senate and the Supreme Court have been at odds over the past couple of years—with each institution testing the other&#8217;s limits. Last week, a senator had amassed 27 signatures to open a parliamentary committee of investigation into the activities of the upper echelon of the Justice system. Officially aimed at targeting abuses by federal judges, the move was seen as an attempt to corner the country&#8217;s highest court—which is solely responsible for trialing cases involving members of Congress facing prosecution.</p> <p>On Monday, though, the hearings committee was shut down after two senators withdrew their support—thanks to intense lobbying from Supreme Court Justices. Senator Kátia Abreu declared she would pull her name from the investigation request after talking to Justice Gilmar Mendes—arguably the most political of the court members. &#8220;This is not the time for an institutional crisis,&#8221; said Ms. Abreu.</p> <p>The Jair Bolsonaro administration has been highly critical of the Supreme Court and their so-called &#8220;judicial activism&#8221;—that is, when the Judiciary starts to rule on issues that Congress chooses not to. In the following years, Mr. Bolsonaro will certainly leave his mark in the court, as at least two Supreme Court Justices will have to retire due to Brazil&#8217;s age limit of 75.</p> <ul> <li><strong>Go deeper:</strong> <a href="https://brazilian.report/power/2019/02/09/congress-supreme-court-jair-bolsonaro-clash/" target="_blank" rel="noopener noreferrer"><em>Congress v. Supreme Court v. Jair Bolsonaro</em></a></li> </ul> <hr /> <h2>Poll shows support in Congress for pension reform</h2> <p>A recent poll by investment back BTG Pactual shows that 89% of senators and 82% of congressmen support the pension reform. Even within the Workers&#8217; Party, 37% of its members of Congress would be onboard. However, support for specific terms of the government&#8217;s proposal are met with some resistance—such as establishing an equal minimum retirement age for both men and women at 65 years old.</p> <p>A pension reform proposal leaked last week, but the Ministry of the Economy is reportedly still finishing the bill. The government wants to invest in how to communicate about the reform, in order not to make the same mistakes as former President Michel Temer. His administration focused too much on the fiscal need for the reform rather than talking about the need to curb privileges created by Brazil&#8217;s current system. But for that to work, the Armed Forces—which is responsible for a BRL 40bn deficit—must make concessions.</p> <p>The government is trying to bargain with state administrations—most of which are in severe financial difficulty. Governors who get their state&#8217;s members of Congress to vote for the pension reform could get their due payments from the central administration sooner than the rest.</p> <hr /> <h2>What else you should know</h2> <ul> <li><strong>Brumadinho.</strong> In a criminal case conducted against mining company Vale, Minas Gerais state prosecutors claim executives knew about the risk of a collapse in Brumadinho—and 8 other dams—since October. Still, the company rated them as &#8220;low risk&#8221; structures. The company, however, claims it was up to date with safety inspections. On Friday, a magazine reported that prosecutors had prepared—but not yet filed—an arrest request against Vale CEO Fabio Schvartsman.</li> <li><a id="nw" name="nw"></a><strong>Roads.</strong><strong> </strong>The federal government is mulling over allowing companies who manage federal roads to raise the prices of toll fares. In some cases, the hikes could reach 58%. The companies are complaining of financial problems and say they can&#8217;t afford to invest BRL 7bn to conduct the infrastructure projects in their contract.</li> <li><strong>Pension reform.</strong><strong> </strong>As the government shows signs of being committed to a pension reform, the number of workers who filed for retirement was up by 30% in January when compared to one year ago. Most want to retire under the current framework—instead of waiting for the government&#8217;s austerity bill to pass.</li> <li><strong>President&#8217;s health.</strong><strong> </strong>After two weeks in the hospital, President Jair Bolsonaro has been authorized to leave as of tomorrow. Mr. Bolsonaro underwent surgery to remove a colostomy bag he used since being stabbed on September 6.</li> <li><strong>Tragedy.</strong><strong> </strong>A helicopter transporting famous news anchor Ricardo Boechat crashed into São Paulo&#8217;s ring road on Monday afternoon, killing both Mr. Boechat and the pilot. One of the most respected journalists in Brazil, outlets all over the country paid tribute to Mr. Boechat during their broadcasts yesterday. According to the civil aviation agency, the company which owned the helicopter was not licensed to transport passengers.

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BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.