Saturday, February 20, 2016

Feb 20th Blog Soy, Corn, Zika, Econ, Prices, Export taxes etc

It has been awhile since I have updated blog.

I have been busy. Some work related and other personal.

Everyone wondering about crop size. Me too.

Lately yield reports are quite good. There some 60 sac/ha or 54 bu/acre
soybeans in Mato Grosso and many other parts of the country.

I do know of a couple fields that have yielded 75 sacs/ha. Intacta soy
and a little luck with rain. I still hear and see of fields yielding 20 sacs also.

SW Goias state seems to be in good shape compared to previous two dryish years.
(Many are reporting on Goias and MGDS applying export taxes).
In my opinion, this is a non-event. If they export too much some excise taxes
will kick in. But for now, steady as we go.

MGDS is coming in with a great crop. Rain makes grain.

I have heard of some 80-90 bu/acre soybeans being harvested in Parana.
These are small fields. But, none the less- damn impressive.

I still see photos of short beans in many locals. There is still a boat load
of average soybean out there yielding about 40 bu/acre.
How does this affect the tally at end of the day??
I still lean to the conservative end of any estimates out there.
It is an agronomist/farmer thing- nothing scientific.

We have millions of hectares of soybeans planted in November and December
and a few in January also. We are in uncharted waters as to how normal
cycle soybeans will yield out of the normal window. They won´t freeze- wink wink,
but Sun could surprise us either up or down on final yields as time goes on.

What will Conab say March 10th? God knows....
The litmus test for me in February was if they would print a number
above or below 100 mmt. If above 100, which it was, they are still
optimistic. We production bears maybe wrong....


What if they print below 100 mmt in March?

May soybeans seem to want to breakout to upside. If the crop is
a 100 mmt+, why are beans wanting to trade higher?

I have seen technical analysis showing a solid argument for 7.90-8.00
soybeans in the months to come. Even 7.50

I have seen wave counts point to 10 bucks if we pop out of this consolidation

I am of the mind since November that 8.43-8.47 are solid lows.
But I think getting on top of 9.20 will also be very difficult given
the size of Brazil and Argie´s crop.

We had Brazil analysts saying Mato Grosso crop was gone in
late December and expect 12.50 soybeans by February. The USA
does not have the supplies to meet Chinese demand. I said Huh???
All I see these days are 450-500 and even 650 million bu carryovers
in USA going forward. Lots of beans.

I have read that if Brazil soy crop is only 97 mmt,in theory, Brazil would
run out of soybeans later in the year assuming record crush and exports.
(This is mildly bullish longer term if we can get this crop size below 100 mmt)

2nd crop corn area will be large. I think it will take away from the
680,000 ha of 2nd crop soybeans that were planted last year at this time.
The size of Mato Grosso and Brazil 2nd crop corn will depend on May rains.
The crop is going in late. They have been lucky 5 years in a row. Can they pull
out another one?

I have posted a fantastic report from IMEA on my website.
It is the 2025 Outlook in English. It is really really GREAT.(trumpism)
I will put together a newsletter around this with my comments and opinion
as to how realistic it is. But every producer in the world should have this
file memorized. If we stay weak on Argie and Brasil FX, these guys can keep
expanding as long as credit and infrastructure are there to move the stuff out.

I thought I was going to be in Rio Grande do Sul this week and then Mato Grosso.
But Zika news has caused my client to cancel his tour for the time being.
Probably a wise move but I am too numb to worry about it. 15 years here you will
realize something or someone else will kill you before a mosquito does. This is
also Viking mentality.

Economy is shrinking. My John Deere dealer buddy is now in training with JD
construction. He left ag sales for now. Small mechanic shops and salons locally
are closing do to lack of movement. Reports of Sao Paulo real estate is down 20%.
Seems to me a 50% correction would be a nice start.

The weather is hot and dry again. This is strange for February. The soil has enough
moisture to germinate and grow like crazy. The end of April and early May I will
be on the edge of my seat again just like at Christmas. How much did it rain???
Did you get any??? and the 2nd act will have begun.


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