My Lesson in Globalization

I learned a bit about globalization this past week when the weirdest thing happened here in Tocantins, Brazil: it rained. And not just a tentative sprinkle or two - this was a thunderstorm.

That's weird indeed because the rule of thumb for this part of the world is that you hardly get a drop in the months that don't have the letter r in their names (May, June, July, August.) 

But this year, the early data is showing that last month was the wettest June recorded in São Paulo—the next state south of where I sat in my kitchen, marveling at the July rain. That state got a reported record 8.8 inches by about this time of last month, vs. a historic average of just 2.2 inches.  Here in my town, the average number of rainfall days in June is one, and the average for July is zero, according to a weather source.

Rains continuing so late this year have helped keep southern Brazilian soybean farmers in business by jacking second-crop corn yields higher after a December-January drought that brought about disappointing soy yields and even crop abandonment in some places. The state of Paraná recently upped its second-crop corn to a whopping 62% over last year's figures, to 10.3 million tonnes.

And with the severe Midwest drought deteriorating the U.S. crop, there are rumors of more and more shipments of abundant Brazilian corn to America.

At the same time, Brazil's Petrobras oil company has been urging the administration here to increase the national minimum ethanol blend in gasoline back to 25%. When supplies got tight in October of last year, the 25% blend had been dropped to 2%. The reason Petrobras wants the old blend back? It's said that, according to a study the company sponsored, a return to a nationwide mandatory 25% blend would cut Petrobras' petroleum imports nearly 40% —and save the company money.

The problem is that sugarcane yields continue to be low, and the late-season rains are slowing the sugarcane harvest considerably right now.  So it doesn't seem likely that the government here will increase the blend rate this year. But it's not out of the question.  After all, Brazil was the United States' biggest customer for corn ethanol last year.

Which is where we get to the lesson on globalization. It doesn't seem outrageous to consider the possibility that at least some of the Brazilian corn supposedly to be on its way to U.S. ports becomes ethanol, which is then shipped back to Brazil for use in automobile fuels.

And there's another commodity that could be globalized as well. If indeed there are to be shiploads of second-crop corn headed north any time soon, I've already got one Indiana resident who has asked to see if some of that weird July rainfall could be included in the shipment.