Partly as result of the La Nina event and also climate change, Brazil is experiencing an unprecedented drought.  Satellite imagery has shown that lakes in the Parana River basin have fallen sharply impacting hydroelectric generation resulting in brownouts.  Low water level in the eastern reaches of the Parana River is disrupting shipping with effectss extending to export terminals in Argentina.  Coffee production in Sao Paulo state will drop 25 percent with a corresponding reduction in corn, sugar cane, and citrus. 

Satellite imagery applying moderate resolution imaging spectro-radiometry that can measure surface evaporation and transpiration from plants shows an elevated rate for the loss of moisture with resulting stress on plants.

Shortage of water will persist in the major agricultural states of Minas Gerais, Goias. Mato Grosso do Sul, Parana and Sao Paulo through September.  Relief from the drought is expected during the November to March rainy season.

The implications for the situation in Brazil for the U.S. are self-evident. Lower availability of corn and soybeans from a major consumer and exporter such as Brazil will increase domestic U.S. prices contributing to higher cost of production and food inflation.