Bartlesby

Will Commodities Be Affected by the South American Drought?

The combination of drought and tight credit has already had a drastic impact on fertilizer consumption (and therefore yield) in the current South American crop season. Some recent evidence:

Brazil’s National Association of Fertilizer Distributors recently reported that fertilizer deliveries fell nearly 9% in 2008 versus 2007. However, a closer look reveals that this drop was driven entirely in the October-December period. Whereas Brazil saw a 5% increase in deliveries for the first three calendar quarters, the final quarter showed a 36% decrease in October, a 50% decrease in November and a 38% decrease in December as compared with 2007.