tag:blogger.com,1999:blog-61809169140606339152024-03-13T09:22:26.513-07:00Kory Melby's Brazilian Ag Consulting and Investment ToursKory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.comBlogger216125tag:blogger.com,1999:blog-6180916914060633915.post-76665501109879462792024-03-13T09:21:00.000-07:002024-03-13T09:21:33.981-07:00<p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;"><span class="s1" style="font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 12px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal;"><b>In Memory of Gene Whitmer <span class="Apple-converted-space"> </span></b></span> <span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">When the student is ready, the teacher will appear.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene was my webmaster, partner, mentor and friend</p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Nov 6th, 1942- 2024 (81)</p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene was born in a small town in eastern Oklahoma. He spent his youth riding back and forth to California with his parents. His father had a small farm and he would go to California to work to put together enough money to plant another wheat crop. Gene attended college at the University of Utah. After college, he signed up for the Peace Corp and was stationed in Mato Grosso do Sul, Brazil in the 1960’s. Gene was from the generation that listened to John F. Kennedy. “Ask not what your country can do for you- ask what you can do for your country”.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">After the Peace Corp, he got a job as a production manager at Johnson Wax in Rio de Janeiro. While living the good life in Rio, his draft number came up for the Vietnam War. He was stationed in Panama as a medic. He protected the “Americas” from the “Commies”, he would say with a chuckle. He took a job with the USAID and was stationed in Vietnam writing reports for the USA government and the CIA to gather intel on the situation. I think this is where Gene gave up on humanity. He would often say “We are all doomed”. He experienced so much death, suffering, deception, and “lack of a plan”. He and a buddy escaped Vietnam to Bangkok two days before the fall of Saigon. They watched it all unfold on TV while sitting in a bar in Thailand.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene then took a job teaching English in Saudi Arabia. Later, he was an English professor at the University of Oklahoma. He met Zelia, Brazilian wife, and in 1986 moved to Goiania where he has lived ever since. Gene set up an office helping Brazilian students with their English. He would get them placed in USA universities. He would take great pride helping someone else succeed in life.<span class="Apple-converted-space"> </span></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene was a bit of a computer programmer/web designer and in the 1990’s set up a site called “Studyintl”. This worked well until Sept 11th, 2001. This is when his business started to retrograde with all the new restrictions for entry to the USA.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;"><b>Along comes Kory</b></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">I had been in Brazil for a couple years as a young father and trying to find my place. In 2005, via "Yahoo community boards”, we find one another as two gringo’s in Goiania. We would meet for drinks at Piquerias once a month and solve all the world’s problems. He was impressed with my knowledge of Brazil ag and all my adventures to date. He said, “Kory, you should start a blog”. What is a blog, I asked?<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;"><b>Creativity is born out of necessity</b></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">We decided to try transfer his number one google ranked site from Studyintl to Brazilintl. We would upload content and photos of my adventures and create a Brazil “Wikipedia” for Ag. I would publish a newsletter and do tours for clients, students, journalists, and investors.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene would handle all the website details and Kory would hit the road. We would meet for monthly pow-wows and butt heads on the future of the site and Brazil. He would suggest what needs to be changed, how I could improve, and where my weaknesses lie. His 30 year experience with Brazil was an invaluable resource as to how to deal with Brasilians, situations, relationships, and the <span class="s2" style="text-decoration-line: underline;">culture.</span><span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">As I advanced, I could be of more and more value to new clients. I could see where they were making mistakes and advise them ahead of time assuming they would listen.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">He would often say, Kory, you are getting too comfortable. You are living the good life. Do not drop the ball here- inflation will eat you up in Brazil. You need to stay ahead of the curve, or when you least expect it, Brazil will change and eat you alive. Case in point, many of my gringo colleagues experienced this and are no longer in Brazil.</p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;"><b>“Wealth is not an indicator of intelligence” </b>Gene Whitmer</p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">Gene had witnessed countless gringo stories and was an avid reader of history. He would give me his books on Brazil pioneers for my son and I to read. He would say- “just look at Henry Ford in the Amazon” or Olacyr de Moraes(Brazilian), the original soybean king in the 1970’s - he wanted to build his own railroad. Common theme, great ideas -<b> failure to execute.</b> I would often tell clients at the airport - “Check your ego at customs”, or Brazil will take it from you. “Stop thinking like a gringo”, you are under new house rules here.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">I look back at Gene’s 60 year arc of Brazil experience. How valuable that was to a newcomer. Gene never did anything for himself. He wanted to enjoy the good life and have the least amount of stress as possible. With that said, he would criticize newcomers to Brazil that they have no clue of what they are about to get into.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">I think back to Gene’s early Peace Corp days. This was to help developing countries with education, civil planning, health care, and indirectly keep the commies out because the USA is here to help. It was to help develop jobs and opportunities for the locals. One could say the Peace Corps had its place, but it really did not do that much. It takes the entrepreneur to take an idea to the next level. It takes venture capital to build the infrastructure. In later years, I would tell Gene: I think indirectly, you helped create thousands of jobs in Brazil. If it were not for us, the site, and the personal relationships developed- I do not think current<span class="Apple-converted-space"> </span>gringo clients, that have invested upwards of US$ 1 billion dollars in Mato Grosso in corn ethanol, would have ever happened. Corn ethanol would have likely evolved, but it would have been with different faces in different places. One needs to give those gringos credit for their ability to execute a plan. So many others before them have failed with their endeavors. I think you can take a little credit Gene that we did something good for Brazil. When you look over the span of 60 years, I think you could say we co-participated in the Brazil/Mato Grosso arc of AG history. We made a positive difference- even if it was in a small indirect way. Well done Gene. Thank you Kory- was his response.</p><p class="p1" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px;">RIP webmaster, mentor, partner and friend.<span class="Apple-converted-space"> </span></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p2" style="font-family: "Times New Roman"; font-feature-settings: normal; font-kerning: auto; font-optical-sizing: auto; font-size: 11px; font-stretch: normal; font-variant-alternates: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-variant-position: normal; font-variation-settings: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-28774321809441867812023-09-02T05:49:00.018-07:002023-09-02T13:15:05.341-07:00Behind the scenes and a new BR planting season <p> Sept 2, 2023</p><p>It has been awhile since the last blog. We have been busy behind the scenes. </p><p>I have been well, but we have been dealing with family members medical issues. Earlier in the year my son's childhood intestinal colitis returned while he was at college in the USA. He had a difficult Spring and Summer trying out new meds. He seems stable at the moment and he is studying abroad in Copenhagen, Denmark this Fall semester. He is getting some pre-med school practical experience there. So far, he loves being there. </p><p>My Father-in-Law suffered another stroke this Summer. He has not known us for more than two years. His significant other and my wife are dealing with that. It is not easy when a parent is in their final days. </p><p>For the most part, Brazil, USA and the markets played out as outlined earlier in the year. Brazil started out with a 153 mmt soybean crop with a two million hectare increase year over year. The final crop size is in the 154 mmt area. Brazil's full potential was probably eight million ton more than that, but Rio Grande do Sul lost about eight million from its starting point for the year. The soybean yields in the MaPiToBa region were exceptional this past year. We hear reports of 80 to 90 sacs/ha soybean yields where 50 is the norm.The past two seasons, the Northeast part of Brazil has been blessed during the "La Nina" part of the cycle. As we move into peak "El-Nino", I think we will see different results from northern Brazil. </p><p>Second crop corn has also performed much better than earlier expectations. The 2nd crop is said to be in the 108 mmt area. Late season rains with no frost allowed the later planted corn to mature to its potential in Parana, MGDS, and Mato Grosso. Mato Grosso is now producing more corn than soybeans. The soybean crop was 46 mmt and the 2nd crop corn was 50 mmt+. This is truly mind-blowing to me as I reflect on the evolution of crop sizes over the past 23 years. I remember when the corn crop in Mato Grosso was five million tons and the corn was worth nothing. The corn was worth about one dollar per bu and that was the cost of the freight to move to where they needed it. I feel like an old grandfather telling stories about the Great Depression. " I remember when" I shipped a cow to Fargo, ND in the 1930's and the value of the cow did not pay the freight etc etc......</p><p>The other data point that stands out to me is that Mato Grosso is much more significant than all of Argentina. Argentina soybean crop of 20/21 mmt and a total corn crop of 32-35 mmt is quite significant in the whole scheme of things. With El-Nino now in control, I would expect Argentina and southern Brazil to return to normal production levels. Who knows, in a few months we maybe talking about flooding in Argentina. They have Presidential elections in October. Argentina is on the cusp of a long term paradigm shift for the better, however, I fear it will get worse domestically for them before it gets better. They are in the final purge. </p><p>Soybean and corn prices in Brazil have declined significantly over the past year. Paradoxically, the Brazil farmer is set to expand planted area yet again for 2024. We are looking for 500,000 hectares more soybeans and maybe a bit more. First crop corn continues to shrink and 2nd crop corn may decline a bit in 2024 as we see more hectares of cotton and wheat. </p><p>The USA has had its challenges in 2023. The corn and soybean crop have suffered in the 9th inning. It seems like the USA has plenty of corn no matter the final number. The soybean crop is a powder keg. If the USA comes in at the 4.1 billion bushel level, that means the USA will need to import beans again in 2024. If Brazil produces a 165mmt+ crop, she can solve the problem. All Brazil needs to do is let out a small fart and one million tons will arrive at USA ports. However, if the Super-El-Nino manifests by the end of 2023, I would think we will have echos of the 2015/2016 growing season at some point. This does not mean disaster, but it does curtail Brazil's potential to shoot the moon in 2024. The kicker is, even if Brazil loses 10 mmt in a given region, that still is a repeat of 2023 soybean production and a near record crop again. It would take a loss of >10mmt in order to grab the market's attention assuming Argentina is normal. The USA domestic market has bullish tendencies but South America can solve the problem by Spring 2024. What do we do with that? <br /></p><p><a href="https://www.brazilintl.com/">https://www.brazilintl.com/</a></p><p>I thought back in February 2023 that we would see a "nut cruncher" rally in the summer of 2023. We had a three dollar rally off the May 31 low. I thought we would have a high in late August or early September. It looks like soybeans put in a high last Monday on August 27th. </p><p>Soybean prices are likely range bound until we get a better grasp of USA yields and production potential. A range of 13.25 to 14.25 probably defines the market. If the USA comes in at 4.2 billion bu or more, down we go. If the USA has a smaller yield, then up we go to curb demand. </p><p>Until we see a 30 day dry spell forming in Brazil, soybeans will likely be range bound. However, any talk of early planted beans needing to be replanted because of burnout, that will grab the market's attention. I still think we have a shot at higher prices basis March and May 2024 soybeans into January and April 2024. What is the catalyst? I am not 100% sure. Could be USA production, War, demand, and/or Brazil production problems. It might be just an inflation hedge as commodities remain popular to own during these uncertain times. </p><p>If there are good rains in Brazil in November and December, we do need to be realistic that soybean prices could crash with a 165 mmt crop on deck. A 165 mmt Brazil crop kills the bull no matter the size of USA soybean crop. A 155 mmt Brazil crop maintains prices and the hint of a 145 mmt Brazil crop sends soybeans prices back to 17-18 dollars. The next 3 or 4 months tells the tale on the future of soybean prices. Are we headed to US$ 10.50? or US$ 17.00? or do we maintain US$ 13.50 to 14.00 until we are certain of South America saturation of the protein market once again. Given the extreme heat around the planet and the recent record high temps in Bolivia and Peru, I would say the risk is to the upside yet. I do not think the bullish story is completely over with quite yet. However, we are in the 8th or 9th inning and we have the USA harvest for the next 45 days. A "light" USA soybean crop and any 30 day dry spell in Brazil will light the fuse. How far do we go? Well, money flow and funds tend to drive that story. </p><p>I will be sending out updates to those on my subscriber list and VIP distribution list in the coming months. Sometimes, I send out several updates per day to those on the VIP list. It depends on your interest and needs. </p><p>Good luck with harvest and I enjoy hearing from all of you.</p><p>Abracos</p><p>Kory</p><p>agturbobrazil@yahoo.com</p><p>Brazil whats app</p><p>55-62-9-9912-1085<br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-91317496698896150942023-01-23T04:47:00.006-08:002023-01-27T10:06:16.330-08:0022 years in Brazil <p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;"><b>22 Years in Brazil-</b> I came from the end of the world. I come from a small town in Northwest, Minnesota. I come from a humble background of rocks, swamp, livestock and crops. Soybeans had just been introduced to my area when I was reading about the massive expansion in Brazil 25 years ago. My home area was heavily influenced by CRP(Conservation Reserve Program), crop insurance, government payments and obedience of wetland and sod buster laws. In essence, farmers were all government employees. No one dared to deviate from the scripted outlines of various farm programs of the 80s and 90s. I felt restricted, boxed in, and unable to break free from the self imposed bondage that, at the time, seemed completely normal.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I had first visited southern Brazil and Argentina in 1993. At the time, I was more impressed with Argentina than Brazil.</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">My story’s beginning starts back in 2000. As I look back at all of the new friends, colleagues, confidants, and mentors that appeared over 20 years, one starts to believe in the phrase: “When the student is ready, the teacher will appear.”<span class="Apple-converted-space"> </span>If it were not for several new friends and mentors that appeared at the correct time over many years, I simply would not have made it in Brazil. The culture, economy, foreign exchange, and language barrier would have eaten me alive.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Brazil is not for beginners. I was a beginner. I knew I needed to check my Ego at customs. I am a guest in Brazil. It is not up to me to change Brazil. It was up to me to adapt to Brazil and <span class="s1" style="font-family: "Arial Unicode MS"; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; text-decoration-line: underline;">“</span><span class="s2" style="text-decoration-line: underline;"><b>jeitinho brasileiro”</b></span>, <span class="s1" style="font-family: "Arial Unicode MS"; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; text-decoration-line: underline;">“</span><span class="s2" style="text-decoration-line: underline;">Brazilian way”</span> refers to the improvised and often informal approach with which Brazilians resolve problematic situations. This Brazilian way of being is seen as both negative and positive, depending on the situation in which it is applied.</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">For a foreigner, I do not think this can be taught. One needs a moral compass in life. However, one needs to be able to turn it on and off. I was able to do that. I think most “gringos” tend to come with a fixed set of ideals and business models, and more often than not, they do not mix well. Think of oil and water. They are both in same cup, but each are at the extreme ends of the cup. One almost needs to think of yourself as biodiesel in Brazil. 5% bio is a bit light. 10% is about right and 15% is maybe too much? I use this analogy as a way to describe how deep you are allowed to enter the Brazilian culture. As a foreigner, you are welcome, but you are never 100% part of the family. If you are an insecure person, this can lead to tension, resentment, and depression. I think in order to survive Brazil, one needs to know who you are first. There are so many diversions in the country that without a stable compass, one will lose focus and lose sight of your Magnetic North Pole- so to speak.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I was able to find solace with my wife and son. My son and his education in Brazil was the foundation for me to put my head down and keep plowing forward. Were there times I wanted to give up? Yes. It would have been easier to walk away than continue in Brazil. There were several times in business negotiations, health issues with my son, and dealing with trying to get paid in Brazil that made me wonder: “What the hell am I doing here?”<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Given that my son is now at Notre Dame University in USA studying to be a Doctor, the heartache and frustration was all worth it in the end. But, when you are in the shit, it is very very hard to see how this will all work out.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">————————————————————————————————————————</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I got started farming in Minnesota clearing land and breaking up CRP from those who went broke in the 80s investing in trees, rocks and swamp in my home area during the previous ag boom in USA. I was a teenager and I was able to step in and clean up their messes. In the late 90’s, I was reading about the Brazil expansion and wanted to understand this better. Could I do in Brazil what I did in Minnesota on a small scale?<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;"><b>Feb 2000</b></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">CASEIH had invited a few of their VIP clients for a tour of their combine and tractor plants in Illinois and Wisconsin. While on the plane, I was seated next to a South Dakota farmer who had just gotten back from Brazil. Needless to say, I was full of questions. I asked him who he went with? He said Dan Mahoney from Morris, MN.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;"><b>June 2000</b></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><b></b><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I drive down to meet Dan. We were like two peas in a pod. We saw the world the same way. Dan’s Brazilian tour partner in Brazil was making his first trip to Mato Grosso in August. He made a video tape of their tour into the frontier of Mato Grosso. Today, soybean ground zero on the planet.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">When I saw this video of new land, trees on fire and massive expansion, I knew I needed to see this.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I need to thank Dan for his countless hours of answering my novice questions about Brazil and his time interpreting for me on the phone after I met Maria some time later.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;"><b>January 2001</b></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><b></b><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">My cousin Mark and I join a dynamic group from USA on a tour of Mato Grosso. We were blown away at what we saw at the time. Soybeans are US$ 5 per bushel and these crazy bastards are clearing sections and townships of land to produce more. Meanwhile, in the USA, we were CRPing and Pre-vent planting to take land out of production because everything was unprofitable. How could these two world’s exist at the same time?<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I returned to Mato Grosso two more times in 2001. I was always a day late and a dollar short to do any deals. Land prices were doubling every few months.</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">From 2002 to 2005 is what I call my incubation period in Brazil. I really did not have any plan. I knew I wanted and needed to be in Brazil. I was not sure how this was going to work.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I had met my future wife Maria in August 2001. With Dan’s help, we kept in touch. I would go down and visit her. I asked if she would like to help in Mato Grosso? She said yes and she was already packed and ready to go. She literally became my Brazilian Sacajawea. She had no fear and was able to help me travel through Indian reservations and deal with local realtors etc. At the end of one my trips, we were at Flamboyant shopping in Goiania. I gave her R$ 100 to go shopping. I sat on the mall bench and waited. After a period of time, she came back with presents for my family in Minnesota. She did not buy a damn thing for herself. I told myself- this one is different. In 2003, my son David was born. Needless to say, the best part of my life.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;"><b>2003-2005<span class="Apple-converted-space"> </span></b></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><b></b><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">This was a stressful time. I had established myself in Goiania. I was now a father. I was in the deep end of the pool- sink or swim. My Portuguese was still limited. I could function, but by no means fluent. I think it took three years for me to become “Brazilian”. I became fluent enough in Portuguese to argue with my wife and, after she smoldered for a while, she would agree that I was correct with my argument. By this time I was doing a few tours in Mato Grosso and spending more time with locals at birthday parties, bars, parties and various get togethers. I remember one time talking to a group of truckers at a truck stop. I was telling them about my food poisoning adventure after eating a pastel at a bus station in Nova Mutum. I puked and shit for two days. I was able to tell this story in Portuguese and animate it. I had the truckers rolling on the ground and laughing tears. I told myself then, goddamn Kory, you maybe gonna be ok here?<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I was the land guy for a new start up company in Cuiaba being funded by Americans that I got to know on my first trip to Mato Grosso. I got to know many people and this gave me some credibility. After a period of time, we each went our separate ways. It was late 2005 and I was now unemployed, feeling very alone, and pondering what the future would hold for this lost Viking from Minnesota. This was probably the scariest time for me. 2006 was a tough year. I did not have much money and I considered packing up and going home. This is just too difficult.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">During this time, I had hooked up with another American expat in Goiania. Gene Whitmer became an invaluable sounding board and mentor along the way. If it were not for him at this time, I would not have made it in Brazil. Gene was a Brazil Peace Corp vet from the 60s. He had vast practical knowledge of Brazil. The good and the bad. He knew nothing about soybeans, but he had a website with a powerful Google ranking. Keep in mind this is all before the advent of social media. We would get together regularly for drinking sessions. These drinking sessions and my ability to go to Goiania shopping and watch a new movie in English were of great importance as to me being able to keep my sanity in Brazil.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Gene was impressed with my knowledge of ag and what is going in Brazil. He suggested I start a blog?</p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">What is a blog in 2005? Since his business of helping Brazil students learn English and study abroad was in decline, he was able to spend a lot of time setting up my current site of www.Brazilintl.com. This was all started as an experiment. This might not work. I threw my lasso around the website and never looked back. Swim Gringo Swim !!!!!!</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I started to publish a newsletter and doing Mato Grosso tours for those interested. I was contacted by hedge funds, journalists, students, and curious travelers from around the world. The website allowed me to be found. From 2007 to 2012 was a blur. I was traveling all the time and sending out reports. I remember February of 2011. I was to Cuiaba three times. Three multi-billion dollar hedge fund tours back to back. I had arrived. I knew who I was now.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">By 2011 and 2012 a new client had popped up as a referral from another client that was getting my newsletter. Summit Ag had reached out for a tour and I showed them around and suggested they meet friends of mine in Lucas do Rio Verde, MT. I had met Paulo Franz on my first trip to Mato Grosso. He and his brother showed interest in corn ethanol production, but they needed capital and know how.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Summit Ag was the perfect fit for a real estate deal and pivot into corn ethanol and Stine seed sales.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">From me saying yes to a tour and picking up the phone on a Sunday during a heated land deal negotiation has lead to circa US$ 750 million being invested in Mato Grosso.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I have not gotten rich in Brazil. I have never screwed anyone one over in Brazil. I was in the right place at the right time to be of service. I do not think my story can be replicated today. It has taken 20 years, but I feel like all of the suffering, sacrifice, and due diligence was all worth it. Indirectly, I was able to contribute to Brazil and Mato Grossso. I have no idea of how many jobs that have been created. From a small idea of a website, blog and being willing to educate and introduce investors to dynamic Brazilian friends and contacts has made it all worth while. One of those tours that I did for a Mutual fund from New York back in Feb 2011 reached out to me in late 2022 for service in the fertilizer sector. That fund manager had moved on, but he remembered me and my tour and told his analyst to contact Kory- he will get you on the correct path. Eleven years after doing the first tour, it is still paying dividends.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Social media has taken away the need for on the ground tours these days. However, one thing that has not gone away is the need for honest, accurate, real time advice on what is happening in Brazil. The ability to separate the noise from the what really matters. Recent political rhetoric is the prefect example.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">At this time, I would like to add that all the friendships, relationships, confidants, and yes all the parties, so so many parties, are worth more than all the Gold in the world. I think we all wonder if we can be “loved”, “liked”, “respected”, or “be of value” outside the small communities we grew up in. The answer is Yes. If you are humble, honest, diligent, and willing to self deprecate oneself by telling jokes, I think the world is full of friends willing to let you into their world. For that privilege, I am grateful. In other words- don’t be an asshole.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I would like to thank the Zanni family for the confidence and letting me into their 60 year story.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Ed bought 170,000 ha+ back in the 1960’s in central Mato Grosso. He was 40 years ahead of his time. He bought soybean ground zero before any soybeans were even thought of. His land was stolen from his family in the 80s and 90’s as the soybean wave came.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">They have been fighting to get their land back and or make deals to resolve the problem. I again jumped into the deep end of the pool. Sink, swim or die Gringo. I was in land mediation with Judges, aggressive lawyers, and local farmers fearful of losing their land. That was so intense, so emotional, and also the fear for my life was also a factor. This story is still playing out and it would make a captivating film. The story is full of betrayal, theft, intrigue, deception, subterfuge, death, and of course a billion dollars worth of land.<span class="Apple-converted-space"> </span></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I am grateful for being allowed to part take in this story. I was able to advise them to do this and not that.</p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">It took years of experience to get there, but this again comes back to the beginning. If it was not for the mentoring of Gene Whitmer(web master), I could have easily fallen into the BR trap of riches, fame and land wealth by being greedy. It was so difficult to operate for years behind the scenes, but by doing so, it kept me alive.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I was asked by an USA investor to check on his investment in Sao Paulo. He had a small factory and his Brazil partner was making roll tarps for trucks. He was wondering where all the money was going? I was able to pop in and find out that the BR partner had been selling inventory to a local scrap yard. He would get rid of inventory for pennies on the dollar for cash in his pocket. I later found that when the USA investor had come down for a visit and it was a Brazil holiday. The Gringo was not aware of this. The BR partner had hired local actors to pretend to be assembling tarps during the holiday as the real workers were at home. But, to keep the money coming and look busy, he had hired actors to manufacture items that would be taken to junk yard the next day for cash. It is paramount that any foreign investor live in Brazil, stand in line, kick the soccer ball around, and go to many many birthday parties in Brazil before you invest here. You must understand this cultural prerequisite first.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I remember on one of my investor tours, I had retired to my hotel room for the evening. I heard a knock on my door and it was a young girl. She was sent to me as a present by a local. I was being watched. I have been followed by Mato Grosso realtors. Everyone wants a piece of the action. One must always give tips in Brazil. Sometimes in advance. When one parks your car at various locals, there is always a kid or someone with eyes watching the hood. You always give guys like this R$5. They are your eyes and ears. They are your car insurance. If it bothers you to give someone money for doing nothing, you cannot live in Brazil. One needs friends wherever you can find them. You need to pay. Even if this friend only last’s an hour. They are on your side for that hour and that can save your life or open the door to a new opportunity you had not thought of.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">—————————————————————————————————————-</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I would like to thank my son’s schools in Goiania. Casa das Letras for my son’s Elementary education and Colego Einstein for high school. The education my son received at these private school’s were invaluable to get him to where he is today. From a very young age, I was teaching my son English. I would take him to the bus each morning and we would repeat the following. The sky is blue. The flower is purple. The grass is green. The car is black. The bird is yellow. The moto is fast. I must have repeated those phrases 10,000 times. David also said those phrases 10,000 times. On Saturday’s or Sunday’s, we would watch the medical TV show “House”.</p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">The show was in English with Portuguese subtext. My son would listen and read at same time. He would see all of those advanced medical phrases and then ask questions about them. He would go to his iPad at the time and look up more info about these rare diseases and read about them in Portuguese.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">In 2013, my son became very sick. It took many trips to hospitals and various medical opinions. He had an auto immune disorder that affected his large intestine. We were literally killing our child with antibiotics and warm milk and cheese. Once we got on correct track, it was 14 months of prednisone. This stabilized him, but he became swollen and affected his development in his adolescent years. He went to school wearing a mask. Kids would ask if had cancer. He became more introverted and wanted to understand why this is happening. He did not like Brazil hospitals. We made a trip to USA in 2014 and got a 2nd opinion in St. Paul, MN. The Indian doctor told us to stop this prednisone immediately. All he needs is a whole foods anti-inflammatory diet and he will be fine. It was a difficult two years from beginning to end. I think this experience shocked my son into the medial field. He wrote college essays saying, that once he becomes a doctor,<span class="Apple-converted-space"> </span>he will dedicate his life to helping kids to not suffer when they are ill.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">The pandemic came and my son graduated high school while laying on a couch. It was very anti-climatic for him. I told him to shoot the moon on his USA college applications. Let us try and turn all of this into lemonade.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">He was accepted to Notre Dame in Indiana, USA. He is a Biology major with a 3.8 GPA in USA. He is on a pre-med track. My son is planning to go to Copenhagen, Denmark this fall in a medical shadow program at an elite hospital there. It has a 1% acceptance rate. He has been accepted for fall semester 2023. Needless to say, his mother and I have tears of joy for him. He also has found his place on this Earth. He found his Povo.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">This story is not done. From a small website, will power, dedication, and putting good people in touch with other good people has made this all worth while. I am welcome at many houses in Mato Grosso and Brazil at any time. If I need a vehicle, airplane, or a favor, it is there. To me, that is priceless in this crazy world we live in. I, of course, had all of that in Minnesota. Surrounded by family, cousins, and neighbors all willing to to bend over backwards to help in a time of need. It took 20 years, but I can say I have that also in Brazil these days. I have friends, neighbors, and contacts that actually care about how we are doing.<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">I would love to hear some feedback from readers.</p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Drop me a note if you liked this story or hated it.</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Let us see where the next 20 years takes us<span class="Apple-converted-space"> </span></p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">Kory</p><p class="p2" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px; min-height: 12px;"><br /></p><p class="p1" style="-webkit-text-stroke-color: rgb(0, 0, 0); font-family: "Times New Roman"; font-size: 11px; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal; margin: 0px;">agturbobrazil@yahoo.com</p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com2tag:blogger.com,1999:blog-6180916914060633915.post-38457745085156718392022-06-05T03:08:00.005-07:002022-06-05T03:18:18.833-07:00Mato Grosso and 2nd crop corn<p> Hi</p><p>I will be in Mato Grosso next week for circa two weeks.</p><p>I will be posting photos and videos on either Twitter, Facebook or Instagram from time to time.</p><p>In Parana state, Cigarrinha do Milho (corn leaf hopper) is spreading a disease called Enfezamento. Basically, it destroys the plants ability to translocate nutrients and fill the cob. The corn plants are dying too early while still in milk stage. There seems to be only a few varieties that are resistant to the disease. There are many factors such as sanitary concerns with volunteer corn, pesticide applications, seed treatment, and climate variability. One variety that is resistant in Mato Grosso might be very susceptible in Parana, for example. Insurance companies are saying they will not pay for the losses. Reports are coming out saying up to 30-40% of Parana 2nd crop is lost due to this disease. </p><p>Meanwhile, early corn yields in Mato Grosso are very good. Some reports as high as 180 sacs or 170 bu per acre are being reported on small tracts. This shows the potential with good varieties, proper rainfall, and planting dates. </p><p>The later we get into harvest the lower the yields will be. IMEA will be out with a new corn crop size estimate for Mato Grosso Monday evening. I will send that out too subscribers. </p><p>There was record area of 2nd crop corn planted in Brazil this year. We have some spots that have not seen a drop of rain for 60 days. These spots will be hurt for yields. But, all in all, given the early start to the dry season, the 2nd crop corn will still be a new record for the country. At one time, we were thinking 90 MMT+. It will likely shake out in the 85 MMT area with a risk of 80 MMT if the Parana losses are confirmed. Last year's drought corn was only 60 MMT for 2nd crop. </p><p>Corn prices have weakened in recent weeks as harvest has started. B3 Sao Paulo corn is trading R$ 90 per sac and spot Sorriso, MT corn is R$ 68/sac. </p><p>I fear for lots of fires again by August. The Cerrado is very dry again and it will be a tinder box by August. </p><p>I find it interesting we have estimates for Brazil's 2023 soybean crop at 148 MMT. I would argue that Brazil will expand very little in the year ahead. Crop input prices are a disincentive to risk too much on new lands. However, the price of land in Brazil has exploded. </p><p>Recent 2022 soybean crop estimates are increasing a little bit from their low point. We seem to be in the 124/125 MMT area for a final tally. This past year, we started with a 143 MMT soybean crop potential, but I think the true potential was more like 148 to start with. We can say that Brazil lost 24/25 MMT of its original potential. Brazil has never seen a production hit of that magnitude in soybeans. </p><p>After two years of being beaten over the head by climate, I would think southern Brazil can count on a big crop in 2023. They are due a big one.</p><p>However, it has been about 7 years in a row of "Feast" of the Northeast quadrant of Brazil- aka MaPiToBa region. I would not be surprised that the "drought" returns the the Northeast in the coming years and other parts of Brazil will be above normal in productivity again. MaPiToBa produces 17 MMT of soybeans these days or equal to a Parana or RGDS. I remember when the region only produced 5 or 6 MMT cumulative. The region might have one or two years of average and then drop into a "Famine" phase of 2 or 3 years. This seems to be the ebb and flow of the Northeast. </p><p>As we get into August to October timeframe, it will not only be the climate that will be hot, but also the politics in Brazil. In October, Brazil has a Presidential election. I am a gringo and I do not vote. It is not appropriate for me to comment one way or another on the candidates. </p><p>Given my agro interests in Brazil, I and my friends are heavily biased towards the current administration. However, as I talk with locals not in "Ag", I am surprised at the high percentage of <span style="background-color: white; color: #202124; white-space: nowrap;"><span style="font-family: inherit;">Brasileiros</span></span> that want to go back to the epoch of 10-15 years ago. I do not pretend to understand this. I am only commenting on what I hear on the street talking with the common folk and lower middle class. I think those with investments in Brazil need a strategic plan to deal with possible changes ahead for 2023 and beyond. </p><p>In October, as the rainy season starts again, I see the potential for many political Gremlins to get wet in Brazil. High food prices, high fuel prices, inflation, and high interest rates will all be hot button issues this fall. The world needs a "recession" to tamp things down, but I have no idea on what a soft landing entails. The wealthy can handle an asset set back. However, the poor will need assistance during this correction and that only leads to more demand. It is a perfect Catch 22 ahead. Damned if you do and damned if you don't. The world sure did not need a war at this time. It just exacerbated the problems. </p><p>There is not a cloud in the sky these days in the Brasilian Cerrado. The morning sun rises and evening sun sets are breath taking. It is the calm before the storm. </p><p>Drop me a note if any questions.</p><p>agturbobrazil@yahoo.com </p><p>I will be doing a couple Brazil/Mato Grosso tours in January/Feb 2023. At least I think so. There is demand again for this, but Covid tests, fuel prices, and logistics could put a damper on things. I do not know today. Any trip to Brazil will be very expensive and subject to travel hiccups along the way. One will need patience or do not come. period........</p><p>Thank you</p><p>Kory</p><p>Keywords:</p><p>Brazil soybeans, Brazil corn, MaPiToBa, general comments </p><p><br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-15179185481141721782022-04-17T06:46:00.004-07:002022-04-17T06:55:12.308-07:00From Peak Pessimism to Peak Optimism <div style="text-align: left;"><b>Sept 18th, 2018 November soybeans made a low at 8.12 per bu.</b></div><div style="text-align: left;"><br /><div>At the time, the USA had 1 billion bushels of soybean carryover and China was<br />sucking Brazil dry as quickly as possible. (Peak Pessimism)<br />I would think in the next 60-70 days, we should be reaching<br />"Peak Optimism". </div></div><div style="text-align: left;"><br /></div><div style="text-align: left;">By June 18th, 2022, 45 months will have elapsed since the 8.12 low.</div><div style="text-align: left;">November beans are toying with 15.20 per bu and the recent high has been</div><div style="text-align: left;">15.55 per bu.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">The 2008 high in Nov soybeans was 16.36 per bu on July 3rd, 2008.</div><div style="text-align: left;">2022 is 14 years from 2008.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">A "doubling" of the 8.12 low is 16.24 per bu. </div><div style="text-align: left;">The 2012 high in SX beans was 17.89 per bu.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Are we headed there again?</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Well, the stage is sure set. With 35 million tons lost</div><div style="text-align: left;">in South America and the war in Europe, if there is</div><div style="text-align: left;">a chance to check out the old record high prices, it is in the</div><div style="text-align: left;">near future. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Brazil's 2nd crop is in good shape. Mato Grosso will</div><div style="text-align: left;">produce a record large corn crop of 40 MMT+.</div><div style="text-align: left;">If there are drought problems in the coming weeks,</div><div style="text-align: left;">it will be in the Goias, MGDS, and Minas Gerias regions.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">At this time, I am not worried about 2nd crop corn.</div><div style="text-align: left;">We have record planted area and most of it went in the</div><div style="text-align: left;">ground 4-6 weeks earlier than last season.</div><div style="text-align: left;">There was some late planted corn again this season.</div><div style="text-align: left;">These acres are at risk, but nominal volumes in the whole </div><div style="text-align: left;">scheme of things.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Soybean planted area is puzzling to me in Brazil.</div><div style="text-align: left;">Obviously, we increased area year over year.</div><div style="text-align: left;">Conab says we are at 40.8 million hectares of soybeans</div><div style="text-align: left;">in 2022. There are analysts that believe the real planted</div><div style="text-align: left;">area is closer to 43 million hectares. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Given the cost of production for 2023 soybeans, I doubt</div><div style="text-align: left;">Brazil will expand soybeans for the next season.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">However, if more acres are found, that will look like</div><div style="text-align: left;">Brazil is increasing year over year. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">There are up to 1.5 million "ghost soybean hectares" in Brazil.</div><div style="text-align: left;">If Conab and others increase their soybean planted area</div><div style="text-align: left;">again for 2023, I would argue that those same acres were</div><div style="text-align: left;">planted during this past season too. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I will continue to argue that this past season's crop</div><div style="text-align: left;">likely had a larger starting point than what has been</div><div style="text-align: left;">in the media. We need to keep this in mind as we look to</div><div style="text-align: left;">2023. We maybe should penciling in 148-150 MMT for</div><div style="text-align: left;">Brazil for 2023 and not numbers closer to 140. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I cannot prove this. The only data point I have that</div><div style="text-align: left;">supports this argument are the fertilizer volumes</div><div style="text-align: left;">delivered to producers in 2021. The amounts were</div><div style="text-align: left;">up 12-14% Year over Year. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">For 2022, we will likely see fertilizer decreases of</div><div style="text-align: left;">20% Year over Year. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">If the Brazil farmer can apply some extra "lime"</div><div style="text-align: left;">or calcario, he can buy some time before the lack</div><div style="text-align: left;">of fertilizer affects his productivity. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">It is paramount that the USA produces at least</div><div style="text-align: left;">an average crop of soy and corn for the year ahead.</div><div style="text-align: left;">If we have any hints that the current crop will come in</div><div style="text-align: left;">below trend line, it will be difficult for the world to</div><div style="text-align: left;">"catch up" again regarding global stocks of corn, soy,</div><div style="text-align: left;">and their derivatives. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">If I had to guess as to how things play out in the</div><div style="text-align: left;">coming months, it would be something like this:</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Wheat, corn and soybeans make a significant market</div><div style="text-align: left;">top by the 4th of July, 2022.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">We have a multi-month sell off and form a new</div><div style="text-align: left;">base at higher levels. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">We then rally again into February 2023. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">This bull market commodity story is likely to last</div><div style="text-align: left;">until early 2024. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The trend should continue upwards with periodic</div><div style="text-align: left;">3-6 month sell offs. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Back in November, I was saying you need to be a bull here.</div><div style="text-align: left;">I was shitting bricks at the time.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">As we get into June, I need to pivot to being a bear, and </div><div style="text-align: left;">yet again, I can see myself shitting bricks once again. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">As Top Gun II is finally ready to come out, I feel like</div><div style="text-align: left;">I have been waiting for this movie for three years !!!!.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">I think the soy, wheat, and corn markets are about to</div><div style="text-align: left;">experience a higher level of G-forces. Strap in and have</div><div style="text-align: left;">a puke bag handy. We will likely need it this June and July.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><b>For more info:</b></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><a href="http://www.brazilintl.com">www.brazilintl.com</a></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Thank you all</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Kory</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Keywords: Brazil soybeans, corn, prices, fertilizer</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-71630697812005548132022-02-13T06:41:00.006-08:002022-02-13T14:46:01.093-08:00You can eat soybeans in my bed anytime <div style="text-align: left;"><b>"You took the words right out of my mouth"</b></div><div style="text-align: left;"><b><br /></b>At 9:01 Brazil time on Thursday, when the Conab report came out, </div><div style="text-align: left;">I was speechless.(<i>I thought of Meatloaf at the time</i>)</div><div style="text-align: left;">Never in the history of Conab have they ever</div><div style="text-align: left;">cut more than 7 million tons from report to report. The last time</div><div style="text-align: left;">was 2012, when the soybean crop was half as large as today.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">I recently penned a newsletter titled "<b>I was a bull when being</b></div><div style="text-align: left;"><b>bullish wasn't cool</b>" paying homage to Barbara Mandrell's</div><div style="text-align: left;">hit from 1981 "I was country when country wasn't cool".</div><div style="text-align: left;"><br /></div><div style="text-align: left;">This blog will be named "<b>You can eat soybeans in my bed anytime</b>"-</div><div style="text-align: left;">assuming you still have any ;>)</div><div style="text-align: left;"><br /></div><div style="text-align: left;">I wrote this in an old newsletter several weeks ago. I know many</div><div style="text-align: left;">people get lost when bouncing back and forth between millions</div><div style="text-align: left;">of tons and billions of bushels. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The USDA said last week that old crop soybean carryover</div><div style="text-align: left;">will be 300 million bu or 8 million tons. Pipeline is said to</div><div style="text-align: left;">be 150 million bu or about 4 million tons.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Brazil came into 2022 with 4 MMT of old crop soybean</div><div style="text-align: left;">stocks. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Brazil was expected to increase from 138 MMT to 145 MMT</div><div style="text-align: left;">this year or another 7 MMT. This is long gone. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Last week, Conab basically confirmed that 20 MMT of Brazil</div><div style="text-align: left;">soybeans is gone. I think we need to be weary of possible</div><div style="text-align: left;">found acres later on. If there are extra acres, they are up north.</div><div style="text-align: left;">(Could we find 1 or 2 mmt later? ). YES</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Chronic rains in the north will keep pressure on soybean quality</div><div style="text-align: left;">in the month of February. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The million dollar question is: will continued dryness</div><div style="text-align: left;">in RGDS pull the production numbers even lower?</div><div style="text-align: left;">Possible- yes </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The anecdotal item that has my ears perked up is the datapoint</div><div style="text-align: left;">that insurance companies in Parana are cancelling 2nd crop</div><div style="text-align: left;">corn insurance policies to farmers. Why?</div><div style="text-align: left;">Did someone poop in their pants when looking at continued</div><div style="text-align: left;">"La Nina" weather maps? </div><div style="text-align: left;">Maybe someone's testicles have not dropped yet?</div><div style="text-align: left;">If so, they have no business being in crop insurance</div><div style="text-align: left;">business. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">With Paraguay talking 4 mmt which is down from 10-11 mmt</div><div style="text-align: left;">of potential. Uruguay will come in 1 or 2 million tons light.</div><div style="text-align: left;">Argentina is looking more like 40 MMT which is down</div><div style="text-align: left;">from 50 MMT to start with. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Bottomline is: USA can plant as many soybeans as she wants</div><div style="text-align: left;">in 2022. The market can take it all. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">Brazil will likely only export about 80 MMT in 2022.</div><div style="text-align: left;">At one time, we were thinking 90 MMT.</div><div style="text-align: left;">With the profitable crush margins, Brazil wants to</div><div style="text-align: left;">try and crush 45-48 MMT in 2022 if they can find the</div><div style="text-align: left;">beans. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I think by Sept, USA will be down to pipeline stocks of</div><div style="text-align: left;">soybeans and by December, Brazil will have "Zero" beans</div><div style="text-align: left;">remaining in the country. Seed only.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Soybean market likely to be stimulated all year now.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">There is no room for production hiccups</div><div style="text-align: left;">in USA in 2022. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">If any threat of crop losses, the markets will be explosive</div><div style="text-align: left;">now.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">I remember back to Nov 9th low in beans. I was saying this</div><div style="text-align: left;">should be a low and we should rally back to 13.15 at some point.</div><div style="text-align: left;">This seemed insane at the time.</div><div style="text-align: left;">Many experts were looking for 11,10, and even 9 dollar soybeans.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">This next week, we will likely check out 14.80 again basis</div><div style="text-align: left;">Nov 22 soybeans. 14.80 always bothered me last year.</div><div style="text-align: left;">It did not act like a high.</div><div style="text-align: left;">If the high would have been 14.74 3/4, I would have been</div><div style="text-align: left;">the biggest bear in the world.</div><div style="text-align: left;">14.80 was a long term "hint". "I ain't done yet" </div><div style="text-align: left;">This is what SX was telling us 9 months ago. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">There are always hints in the market. The problem is finding them</div><div style="text-align: left;">and looking for subtle signals that a novice overlooks as just</div><div style="text-align: left;">another fundamental number.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">There are more to the markets than fundamentals. But, it seems</div><div style="text-align: left;">like it takes looking at charts for 30 years to be able to see them.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">If we cannot trade 14.80 early in the week basis Nov 22, then I would</div><div style="text-align: left;">think a sell off is likely.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">If we trade 14.80- that will be one thing.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">If we close on top of 14.80 twice, then I think it is</div><div style="text-align: left;">a straight shot to 16.36 basis SX.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">When do we get there?</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Maybe March 3rd maybe </div><div style="text-align: left;">April 4th. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">I think there will be many 50 cent and 1 dollar moves</div><div style="text-align: left;">up and down between now and mid June.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Keep the Dramamine handy, the soybean market</div><div style="text-align: left;">will likely do a few barrel rolls and maybe even</div><div style="text-align: left;">a few <b><u>power on stalls</u></b>. Let us hope that does not</div><div style="text-align: left;">put us into a death spiral whereas it is difficult to</div><div style="text-align: left;">pull out of. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">The next 120 days will likely be something to</div><div style="text-align: left;">tell the grand kids about. </div><div style="text-align: left;"><br /></div><div style="text-align: left;">If you missed out on 2008 and 2012, the next</div><div style="text-align: left;">crazy train is about to leave.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">All aboard !!!!</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Please bring your roasted soybeans with you ;>)</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Kory</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-73507828824110837222021-12-24T07:30:00.007-08:002021-12-27T09:56:50.002-08:00Happy New Year Welcome 2022<p>Happy New Year</p><p>I am not sure where 2021 went? For us, it was all a blur, but everything ended up being ok.</p><p>I would like to thank all the new subscribers and VIP clients this past year. I would also like to thank all the old subscribers that continue to renew year after year. It is appreciated. </p><p>I find myself working through the holidays- just like last year at this time with Brazil drought concerns and a bull market in the making. I have outlined my price objectives for new crop soybeans and so far the soybean market is behaving as expected. I must say the May through October time frame was confusing and stressful. </p><p>Western Parana, Santa Cat, parts of RGDS, and Paraguay are suffering a historic drought. It seems like every year they have some sort of dry spell and each year it gets worse. Last year the soybean crop was planted later and or replanted, so when the rains came in December, the crop still had time to recover and still produce 20 MMT each for Parana and RGDS.</p><p>To keep things in perspective: Parana + RGDS = 1 Mato Grosso. </p><p>20 MMT + 20 MMT = "one" Mato Grosso or 40 MMT.</p><p>40 MMT = 1.45 billion bushels</p><p>1.45 billion bushels = all the soybeans in Iowa and Illinois combined.</p><p>Mato Grosso is in fantastic shape. </p><p>As of December 20th, Sinop, Mato Grosso had recorded 1000 mm(40 inches) of rain since the beginning of the crop year starting in September. Compared to recent years, this is above normal rainfall. However, compared to 20 year historic rainfall, this is about right. We should get another 1000 mm or 40 inches from late December through the end of February. Normally, these heavy rains come in late January and early February and are called the "Amazon rains". </p><p>With the soybean crop ready to be harvested in early January, we must hope these rains diminish in intensity so as to allow harvest and get the 2nd crop planted timely and in decent soil conditions. </p><p>The yields out of Mato Grosso should be "awesome" this year.</p><p>By contrast dryer regions, such as Tocantins and Bahia, are getting well above normal rainfall for their region. The forecast is for 16-20 inches in the next 2 weeks. THIS IS A WOWZER.</p><p>Meanwhile, Parana, RGDS and Santa Cat cannot catch a rain. </p><p>Many fields in western Parana are now past the point of no return. The crop was planted in late Sept and early Oct which means the soybeans are now in the last phases of pod fill. For many fields, it will be too late if rains come in early January. </p><p>For RGDS, the situation is more of a jump ball. Early planted soybeans are hurting. However, soybeans being planted into wheat stubble today can still turn out quite well if rains would return in January. </p><p>For Paraguay, I am hearing of 30% losses and previsions for 50% crop loss without rains in next 2 weeks. </p><p>Paraguay was on deck to produce 11 MMT. Current estimates are for 8.5 MMT and dropping to 6-7 MMT is quite likely given current weather pattern.</p><p>Brazil 1st crop corn will not be 29 MMT as previously forecast by Conab. We are now looking at something less than 25 MMT -maybe even 23 MMT.</p><p>Brazil's corn ethanol production continues to surge and is helping compensate for last year's sugarcane crop loss due to drought. </p><p>After last season's 2nd crop failure with late planting and drought, this is not what the domestic corn market needed. More corn imports from Argentina are needed to balance the supply demand equation over the next six months until Brazil 2nd crop can come online. </p><p>The BRL is trading at 5.70:1. Inflation, 2022 elections, and questionable economic policy regarding future interest rates and recession are all conflicting data points that the central bank is trying to deal with. </p><p>Strange new political alliances are occurring to try and maintain power and or defeat the current administration. If old PT leaders rise again, the markets will be in turmoil for most of 2022. </p><p>AC/DC will sum up 2022- I fear- <u>You shook me all night long</u> ;>)</p><p>By the end of 2022, the new theme song will likely be <u>"Shake it off" </u></p><p>I am not sure what will happen in Brazil as per politics, economy, and crop production in the year ahead. What I do know is that Brazil will be the best show in town for most of the year. There will be no shortage of intrigue, drama, emotion, and passion. </p><p>70% of the Brazil crop is in great condition albeit a bit wet. 30% is suffering a serious drought.</p><p>I have outlined potential crop loss parameters in recent newsletters. </p><p>I send out audio reports from time to time. I include videos when possible.</p><p>Drop me a not if you have any questions.</p><p>I have increased the price of the newsletter and VIP light service for 2022. </p><p>agturbobrazil@yahoo.com</p><p>or visit my website at <a href="http://www.brazilintl.com">www.brazilintl.com</a></p><p>Happy New Year</p><p>Kory and Brazilintl team</p><p>Keywords: Brazil soy production, Brazil weather, Brazil crop size potentials, BRL, politics 2022</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-4340873394765823712021-11-17T11:18:00.002-08:002021-11-17T11:18:45.045-08:002022 Brazil soybean crop<p>Nov 17th, 2021</p><p>Rains have been steady and beneficial.</p><p>I am not too worried about 2nd crop corn and cotton inputs.</p><p>2023 crop inputs are a dilemma. </p><p>The Brazil soybean crop will be quite large.</p><p>Lots of talk about a Brazil CRP payment for Amazon. I am not sure if Brazil is ready for this.</p><p>Any questions:</p><p>www.Brazilintl.com </p><p>"<span style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 13.3333px;">I am a producer from western South Dakota. I love your witty commentary. "</span></p><p><span style="background-color: white; font-family: Helvetica, Arial, sans-serif; font-size: 13.3333px;">DB SD, USA</span></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-43192609009048005952021-07-18T05:32:00.003-07:002021-07-18T05:36:05.206-07:00July 18th blog update <p>Much has happened since the last update:</p><p>My son has been accepted to Notre Dame University in the USA. He is a very happy young man today. He wants to pursue Biology and pre-med courses. I look forward to getting him set up in South Bend in the coming weeks. Classes start August 23rd. </p><p>Brazil is a circus. But, that is also the norm. Vaccination ages are down to the 38 year olds. The Delta variant is ripping through non vaccinated populations. The current admin is under investigation for its handling of the pandemic. Much chatter about impeachment. The current admin's approval rating is down to 24%. </p><p>The central bank has been increasing interest rates and also doing some currency swaps to keep the REAL under control. So far, they seem to be doing a good job. The equilibrium price for the REAL seems to be about 5:1. FX at 5.30:1 seems too cheap with many economists thinking the REAL should be 4.50:1. With political uncertainty for 2022, my guess is the REAL will remain weak as to factor in some political risk for the year ahead. </p><p>Expensive corn, crude oil, beef, chicken, and pork are all big headwinds for current admin to deal with in the year ahead. I made a comment a few months back in my newsletter stating that the current president's destiny is tied to Brazil domestic corn market. Some would say that energy prices will be the undoing of him. With the current dry season in play and water reservoirs at record lows, the ability to keep the lights and air conditioning on in the coming months might be a determining factor for the presidents' future. </p><p>Ag sector is 100% behind the current President. They want to see the projects that have been initiated during the current admin completed in the next 3 to 5 years. If we see a new admin at the beginning of 2023, many projects could stall. Brazil is well known for starting a project and never finishing on time. It seems like even a small project takes a decade. </p><p>Weather guys tell me to keep an eye on the cool water in the Pacific and Atlantic Oceans. The weather could be a repeat of last season. A dry, late start to planting followed by heavy rains at harvest and then dry again for 2nd crop. I doubt the year will be as screwed up as last season. If a repeat of last year, many will lose their minds. </p><p>Brazil looks like it will add another 1.5 million hectares of soybeans again for 2022. The fertilizer imports and sales are verifying this datapoint. Much chatter about lack of glyphosate for 2022. Farmer organizations have sent out press releases saying not to worry. The prices are higher, but there will be enough product. </p><p>We will see a limited amount of X-tend soybean seeds out in the market this year. Farmer test plots and the like. 5-10-15 hectare plots I think. </p><p>Replacement parts and getting delivery of new machines are also running behind. Basically, if you need a new tractor or combine, do not expect delivery until well into 2022. </p><p>Two major lessons to take away from the 2021 Brazil crop.</p><p>1. Do not kill the soybean crop before Christmas. </p><p>2. Do not plant 2nd crop corn after March 10th. </p><p>Brazil needs to get its 1st/2nd crop corn ratio back in balance. I think we will see a bit more 1st crop corn in 2022, but the increase will be nominal. It will be up to RGDS and Santa Cat farmers to step up to the plate and get more 1st corn planted. This can happen as early as August. </p><p>Things to keep an eye on in coming months:</p><p>1. Political impeachment proceedings</p><p>2. Late start to soybean planting i.e. not starting on Sept 15th</p><p>3. Lack of water and electricity in metro areas</p><p>4. Corn imports from ARG and USA later in the year</p><p>5. A lifting of travel restrictions by USA for Brazilians to travel abroad</p><p>6. Who will be the lead presidential candidates to counter the current admin?</p><p>7. Selic interest rates to 7% by year end to curb inflation </p><p>8. A breakout of the BRL below 4.80:1 or above 5.30:1 </p><p>Drop me a note at agturbobrazil@yahoo.com for more info.</p><p>www.brazilintl.com </p><p>Good luck with harvest </p><p>Abracos</p><p>Kory</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-67237143399386207322021-04-02T10:22:00.005-07:002021-04-03T05:39:57.291-07:00From droughts to floods and still 135 MMT<p><b> How many hectares of soybeans were planted in 2020?</b></p><p>In the March Conab report, they increased planted area by 200,000 ha from 38.2 M ha to 38.4 M ha. There are some BR consultants using a 38.9 M ha planted area. This extra 500,000 ha would yield an extra 1.5 to 1.7 million tons. This explains part of the difference of opinion of those who think the crop is from 133 to 135 MMT. </p><p>In the January newsletter, I looked at fertilizer delivered to producers and calculated that it is possible the starting point for this year's soybean crop started at 136.5 MMT. </p><p>When I think back to the weather patterns back in Oct, Nov, and Dec, I am amazed that we are looking at a crop that is 133 MMT or larger. What does it take to kill the BR crop? The December 15th rains were a godsend because without them, millions of tons were on the cusp of evaporating. </p><p>Mato Grosso yields were 5-7% less than last year's record productivity. Para state and Tocantins also took a hit from too much rain in February. The city of Sinop in Mato Grosso has received 2000 mm of rain from Oct to March. Most of the rain came in the months of December and February. We had a drought and a flood in the same crop season. </p><p>Early Parana yields were terrible. However, later planted soy turned out ok. The yields were 60 sacs per hectare. This is good but not like the 70 and 80 sac yields from the previous season. </p><p>Bahia was probably the garden of eden in 2021. We are hearing reports of 80 sac soybeans. For Bahia, this is beyond fantastic. Bahia will likely produce 6.5 MMT this year. </p><p>RGDS is also in good shape. There is much talk of a 20 MMT crop. RGDS is the only state that can plant soybeans behind corn due to Asian rust. There are some very young soybeans in RGDS that are benefitting from late season rains. </p><p>We still have a wide range of opinions for the Brazil soybean crop. From 128 MMT to 136 MMT. I find this 8 MMT spread really really interesting. I think back to 10 years ago, it seemed like we would debate the size of the BR soybean crop and everyone was in a 2 or 3 MMT bandwidth. The bigger the BR soybean crop becomes, the wider the ranges have become. </p><p>Subscribers know where I stand. </p><p>For 2022, it looks like a 140 MMT soybean crop is the baseline. It would take some really weird weather to come in less than 140 MMT in 2022 at this rate. </p><p>Cost of production is an issue for the year ahead. KCL has risen from R$ 1600 per ton to R$ 2200 per ton for the next season. Urea has risen from R$ 1650 per ton to R$ 2300 per ton. MAP from R$ 1900 per ton to R$ 3500 per ton. Will this curb expansion? Not likely so long as corn and soybeans remain at record high prices- the animal spirits will run free. </p><p>Land prices and land rents are on the rise. Many are negotiating new rental rates at higher levels up to 2 years in advance of contract expiration. I know of land rents in Mato Grosso that were at 13 to 15 sacs of soybeans per hectare rising to 18 sacs per hectare in the future. This is a wow for MT.</p><p>This brings us to 2nd crop corn. Will we kill this crop in the next 30 days or will Brazil pull a 2nd rabbit out of her hat for 2021? </p><p>Corn prices on the B3 are trading at R$ 95 per sac for May. With a weak FX/BRL, this will likely trade at R$ 100 per sac of corn in April. Who wudda thunk?</p><p>I remember when corn traded at R$ 5 per sac in Mato Grosso back in 2005 time frame. </p><p>Last year's 2nd crop corn was 75 MMT. We planted a record area of 2nd crop corn this season. I know of corn that is still being planted in Goias and MGDS as I type this. On the surface, one would have to assume these producers are insane to keep planting corn. It would be like planting corn in Iowa in July. </p><p>Why are they doing this? </p><p>It depends on the area. What is your land cost? If you have paid for land, one can plant a low cost corn crop and breakeven at about 30 to 40 bushel per acre. In the states, we would call the crop insurance agent to send out the adjuster. In Brazil, in 2021, if you can harvest something better than 40 bu per acre on cheap land, you are likely to be in the black. This is because of the high price of corn. Keep in mind they are reducing populations and will likely only spray the corn twice. Once with glyphosate and one more time for bugs. Take what you get. </p><p>We have already seen reductions in the 2nd crop corn from 83 MMT to 77 MMT. This will likely continue. We will not get an accurate count of BR corn crop until August. We will likely be hearing production ranges from 70 MMT to 80 MMT+ for a long time yet. </p><p>I ask myself: What if BR 2nd crop corn comes in at 70 MMT at the same time USA is hot and dry in July? That might garner the markets attention? </p><p>We have a market situation in Brazil that is completely out of balance. We are seeing spot corn reaching R$ 100 per sac and soybeans are at R$ 150-R$ 160 per sac. A ratio of 1.5:1.</p><p>Can you imagine if Chicago was trading US$ 15 dollar soybeans and corn was trading US$ 10.00 per bushel at the same time? That is what it is like in Brazil at the moment. </p><p>Area of 1st crop corn has been decreasing and shifting to soybeans for over 10 years now. I will assume that in Parana, Santa Cat. and RGDS we will see a reversal of this trend for 2022. We should start to see more 1st crop corn being planted by August this year. Brazil has put too much dependence on the 2nd crop. </p><p>Inflation is running hot in Brazil. Gasoline and Diesel are on the rise. Beef, soy, and corn are all at record high prices. The BRL seems to like the 5.70:1 area. The pandemic has gutted political, economic, and social stability. If the BRL could drop back to the 4.50:1 area, many problems would correct themselves. If we pop above 6:1 in the future, Brazil will be in chaos. 2022 is an election year. </p><p>If one lives inside the BR Ag bubble, things are exciting in Brazil. If one lives outside the bubble, the future is quite scary in Brazil. Vaccinations are picking up pace now, but it is starting to act like much of 2021 will disappear before any sense of normalcy will return to Brazil on a macro level. If the natives get restless, things could deteriorate from here. The publics patience is wearing thin. </p><p>Happy Easter to all,</p><p>For more info drop me a note at agturbobrazil@yahoo.com</p><p>www.brazilintl.com</p><p>Kory</p><p>keywords: soybeans, corn, crop size, record prices, planted area, inflation </p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-43247747154849420692021-02-10T10:52:00.001-08:002021-02-10T10:52:11.614-08:00Feb 10th blog update <p><b> The slow harvest continues........</b></p><p>Steady as we go here. My son, David, graduated from BR high school while lying on the couch. He has applied to 10 different USA universities and we are in a wait and see mode. To date, he has received one approval from a college in St. Paul, MN. This was not his first choice but more of a backup college. </p><p>I am not sure where the last 17 years have gone. It was just yesterday when it was common for me and him to go to Goiania shopping, watch a movie, grab some fries and Mcnuggets and call it day. He is now ready for the next step in his educational career. He is fluent in Portuguese and English. </p><p>I am reminded of a closing scene in a TV program called "<i><u>Everwood</u></i>". I remember watching it and the TV show <b><i><u>"House</u></i>" </b>with David on the weekends ten or more years ago.</p><p>The letter the mother wrote to her graduating son was very good I thought. I told myself, that this is what I would write to David when the time was right. </p><p>"<span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;"><i>My dearest Ephram...</i></span></p><i><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">I've been sitting in our kitchen for the last half hour simply imagining you... wondering what you must be thinking right now... what you must be feeling.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">How handsome you must look in your cap and gown.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">If you're thinking about me...Stop! Send a kiss to the sky... And then focus your thoughts on what's coming towards you, not what you left behind.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">I'm forever entwined in your past...your present...and your future. You needn't pause to look for me. I'm right here.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">If you're feeling frightened about what comes next...Don't! Embrace the uncertainty. Allow it to lead you places. Be brave as it challenges you to exercise both your heart and your mind, as you create your own path towards happiness. Don't waste time with regret.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">Spin wildly into your next action. Enjoy the present...each moment as it comes... because you'll never get another one quite like it.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">And if you should ever look up and find yourself lost, simply take a breath and start over. Retrace your steps and go back to the purest place in your heart where your hope lives.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">You'll find your way again.</span><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><br style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;" /><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;">Love, Mom."</span></i><div><i><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;"><br /></span></i></div><div><i><span style="background-color: white; font-family: verdana, arial, geneva; font-size: 13px;"><br /></span></i></div><div>I think in this time of Covid, we can all find ourselves lost. We think of things as they used to be. </div><div>In Brazil, everyone hugs and kisses each other on a regular basis. Covid is really a shock to this culture. </div><div><br /></div><div>I am thankful for clients that have stayed with me for up to 17 years. The new demand lead rally that got going in November was a welcome change to the circa 3-year pause due to the USA/China trade war. </div><div>To all the new subscribers, welcome. </div><div><br /></div><div>I pointed out in the newsletters that I thought the April 2020 low was a long term low. We need to be thinking of higher prices not lower. But, with that said, I did not think a 6 dollar rally was possible in a matter of weeks. </div><div><br /></div><div>In the February part IV newsletter, I showed the significance of the Jan 15th high of 12.03 basis Nov 21 soybeans. I hope clients made use of it. This does not mean we cannot go higher, but for the moment, we maybe take a little pause. </div><div><br /></div><div>The Brazil soybean crop is very late. I find it confusing how we have some thinking the crop is small such as 128 MMT and others that think the crop is getting bigger at 135 MMT. These 7 MMT are damn important when the USA is running on fumes. </div><div>Conab comes out on Thursday, Feb 11th. </div><div><br /></div><div>On Brazil rural media, I found it interesting that a farmer out in Sapezal, MT has measured the <u>lowest July to Dec 31st precipitation in his <b>40-year history</b></u> on the land. It has never rained less than 650 mm or 26 inches of rain during this period. In 2020, he recorded 256 mm or 10.25 inches of rain. Rainfall picked up in January which saved his crop. On average, he says he will lose about 2 sacs per ha from last year's yield. Not bad- considering. </div><div><br /></div><div>Drop me a note if you would like a sample newsletter. I am not into free trials. I respect new VIP clients that step up to the bar and buy the elevated service level. I would be happy to provide references. </div><div><br /></div><div>Brazil is starting to get some vaccine. The old people are first and I see elderly people in nursing homes on the news screaming that they do not want it !!!! One 90-year-old lady said to a nurse after her shot,</div><div>Where is my beer? I should at least get a beer for going through this. I chuckled. </div><div><br /></div><div>Stay safe</div><div><br /></div><div>Kory</div><div><br /></div><div>agturbobrazil@yahoo.com</div><div><br /></div><div>Keywords: slow soy harvest, soy market, newsletter, lack of rainfall </div><div><br /></div><div><br /></div><div><br /></div><div><br /></div>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-67988128278397730402021-01-09T05:37:00.006-08:002021-01-09T15:32:20.670-08:00Do you know how Brazilian you have become? <p>Watching events in the USA the past week from afar has made me ask myself:</p><p>Is this USA or Brazil I am watching on TV? I ask myself if I was 25 again, would I have been in Washington D.C. too?</p><p>In Brazil, when I meet someone new and they ask where I am from, I respond that I am"Paraguayan" aka <span style="font-family: inherit;">"Brasileira<span style="background-color: white;"> falsificado".</span><span style="background-color: white;"> It usually begets a laugh from the Brazilian native. </span></span></p><p><span style="font-family: inherit;"><span style="background-color: white;">After living in Brazil circa 18 years, one gets to a point where one has seen all the "<u>wasted emotions</u>" and drama the culture can create. I think at its core this is what attracts Gringos to Brazil and in the end, it drives them insane. Latin America is known for its "<i>Passion"</i> and lust for life. Sometimes these emotions get in the way of rational thought. In Brazil, this is <u>normal</u>. When we see behavior like this in the USA, for example, the viewer looks at this as the beginning of the end of the world. In Brazil, we look at this and say that the group is just venting their "passion" or beliefs, they will cool down in a day or so. I call them Brazilian "<u>solar flares</u>". Let them get it out of their system. Brazilians will holler and scream and beat on one another while yelling demeaning comments about the family member or friend. To an American, we find this to be insane and would never talk to this person again. However, in Brazil, it might take a few days or a few months, but the "<u>fighting parties</u>", will then cry, hug, kiss, and apologize for hours as they discuss how they were possessed by "<u>demons</u>" or " <u>bad spirits</u>" and they are now possessed by the "<u>Holy Spirit"</u> and all is well again. </span></span></p><p>When one sees this enough times, one knows better and I just walk away or know enough to not engage in the situation. A "time out" so to speak. In Brazil, it is not only the conflict that is "<i>Dramatic</i>", but also the resolution must have a copious amount of emotions and tears. Therefore, both parties get two movies for the same price. In the USA, we seem to enjoy paying the entrance price for each movie. </p><p>To most reading this, they will have no clue what I am talking about. It only comes with years and years of living in another culture outside the USA. </p><p>With the preface above, I will not get too political as it has no upside business potential for me to do so. I will stick to the data, Brazil, Argentina, Soybeans, and Corn.</p><p>When I look back at the last four-plus years and all the rhetoric on social media, the desensitization of other Americans and humans, are we really that surprised that it would end with a display of <u>"emotion"</u> like what we have witnessed this past week? Really?</p><p>I think all of us should look in the mirror as to who we are today as compared to four or more years ago? We all look at the TV and say: "Has the world gone mad?" Maybe we need to ask the question? What did I do or not do, that helped lead to this? </p><p>If a 16-year-old sneaks out and goes to a party and takes selfies drinking at the party, does that not merit taking their car keys and cell phone away for a period of time? I realize we are all up in arms about censorship and freedom of speech. We see freedom of speech as a "right". But I must say, I think it also a privilege, and maybe some of us have abused that privilege on both sides in 2020. </p><p>We must not abuse that "right" by inciting hateful and demeaning remarks about others. If you have nothing good to say, then say nothing at all? What if we would have lived by that motto for the past 4 plus years?</p><p>Every one of us has co-participated in the <u>degenesis</u> of the American body politic. Let us hope that this is the crescendo of the 2nd act of the movie where the plot takes an unexpected turn and the hero appears for a happy ending. The past four years were intense. It might take a while for some to <i style="text-decoration-line: underline;">come down </i>from the adrenal high that we have been on for some time. We became accustomed to chaos. Chaos is not the norm. </p><p>Back to Brazil soybeans:</p><p>The past 3 weeks have been beneficial to the Brazil soybean crop. </p><p>The forecast for the next few weeks for Brazil and Argentina is for more rain. </p><p>I have included some stats in a recent newsletter to help readers build comprehension. </p><p>The market is obsessed with Argentina. I make the argument that Argentina is more of a corn story than a soybean production story. In the past five seasons, Brazil has increased circa 40 million tons of soybean potential or 1.4 billion bushels. In the same five years, Argentina's soybean baseline has shrunk circa 10 mmt from 60 mmt to 50 mmt. This has been due to a confluence of factors such as export tax, fx, climate, politics, inflation, and cost of production. </p><p>The bottom line is: if Argentina comes in a few million tons light in 2021, it is not that big of a deal.</p><p>If Brazil and or RGDS comes in a few million tons light in 2021, it becomes a bigger story. </p><p>I think Conab could increase planted area in the January report and cut yield estimates for Mato Grosso and Parana. I know of a few hundred thousand hectares of soy in Mato Grosso that were abandoned and planted to cotton. I am not sure when these acres will be counted. I fear Conab goes higher before it goes lower for the soybean crop. I could be and hope I am wrong. </p><p>For more info contact me at</p><p><a href="http://www.brazilintl.com">www.brazilintl.com</a></p><p>or drop me an email at agturbobrazil@yahoo.com</p><p>stay safe</p><p>Kory</p><p><br /></p><p><br /></p><p> </p><div style="text-align: left;"><br /></div>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-425710021026862142020-11-25T10:53:00.003-08:002020-11-25T11:10:31.382-08:0040 year drought in Brazil<p style="margin: 0px; padding: 0px;"><b><br /></b></p><p style="margin: 0px; padding: 0px;"><b>Happy Holidays</b></p><p style="margin: 0px; padding: 0px;"><b><br /></b></p><p style="margin: 0px; padding: 0px;">Much has happened since Sept 1. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Back in Sept, I too was a proponent of 135 mmt of soybeans</p><p style="margin: 0px; padding: 0px;">and 110 mmt+ of corn. Today, I am not.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">I read weather reports saying that this is worst drought in 40 years.</p><p style="margin: 0px; padding: 0px;">I might remind readers that 2015/2016 drought was quite severe.</p><p style="margin: 0px; padding: 0px;">I must try and rationalize this. Forty years ago there were no soybeans</p><p style="margin: 0px; padding: 0px;">in Mato Grosso. There were only cows, gold speculators and T-rex's</p><p style="margin: 0px; padding: 0px;">roaming the great Cerrado or transitional Amazon rain forest. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Back in August and September, when the Pantanal was on fire and </p><p style="margin: 0px; padding: 0px;">making global media attention, I read that this is the worst Pantanal fire</p><p style="margin: 0px; padding: 0px;">since 1950 or some such date 60 or 70 years ago.</p><p style="margin: 0px; padding: 0px;">"<i>Correio Braziliense writer Simone Kafruni noted that, “while the eyes of the world are focused on deforestation in the Amazon, the fires do not stop burning the Brazilian Pantanal.” According to the article, the lack of rain in the biome for the period is one of the worst in that region in the last<b> 47 years:"</b></i></p><p style="margin: 0px; padding: 0px;"><i><br /></i></p><p style="margin: 0px; padding: 0px;">The point being is that this has happened before- before the <b><i><u>modern soybean era</u></i>. </b></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">So, in my mind, we cannot blame this on soybean farmers and deforestation. </p><p style="margin: 0px; padding: 0px;">We maybe can make a case for an acceleration of a natural process, but we cannot</p><p style="margin: 0px; padding: 0px;">blame 100% of this on agriculture. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">As of today, Nov 25th, 2020, we are experiencing below normal rainfall in several</p><p style="margin: 0px; padding: 0px;">Brazil states and into Argentina. Many call it La Nina. However, in the Pacific Ocean,</p><p style="margin: 0px; padding: 0px;">we do not have La Nina type conditions. So, for the sake of argument, let us say we are</p><p style="margin: 0px; padding: 0px;">experiencing a weather anomaly that has La Nina type conditions. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">This has caused the replanting of soybeans. It has caused a few producers, who grow cotton as a 2nd crop, to hold back some intended area of 1st crop soybeans so they can plant their cotton in a timely manner in December. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">We are hearing about major losses in 1st crop corn in RGDS.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">We have some soybean fields that look fantastic and others that are flowering and setting</p><p style="margin: 0px; padding: 0px;">pods and are only 10 inches high. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Generally speaking, if we draw a line EAST/WEST from Cuiaba, MT across the country,</p><p style="margin: 0px; padding: 0px;">to the north of this line the crops are fine and to the south of this line we have crops that range from</p><p style="margin: 0px; padding: 0px;">terrible condition to those running on luck because they have caught a few random showers. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Cuiaba to Goiania is 16 deg S latitude. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">I would say those crops north of 15 Deg S latitude are in good shape or at least</p><p style="margin: 0px; padding: 0px;">have some cushion to handle a hot dry week such as what we are experiencing.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">So the question is: How much soy is growing north of 15 Deg S latitude and how</p><p style="margin: 0px; padding: 0px;">much is under stress to the south of this line?</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><b>Mato Grosso</b> 37 mmt potential with 7 mmt in SE MT under stress</p><p style="margin: 0px; padding: 0px;"><b>Goias</b> 13 mmt potential with 50% under stress </p><p style="margin: 0px; padding: 0px;"><b>MaPiToBa</b> potential is 15.7 mmt and all is in good condition</p><p style="margin: 0px; padding: 0px;"><b>Minas Gerias</b> 6 mmt with 50% under stress</p><p style="margin: 0px; padding: 0px;"><b>Sao Paulo </b> 4 mmt with 50% under stress</p><p style="margin: 0px; padding: 0px;"><b>Parana </b> 20 mmt with 50% under stress</p><p style="margin: 0px; padding: 0px;"><b>RGDS</b> 20 mmt with 50% or more under stress, but later planting</p><p style="margin: 0px; padding: 0px;"><b>Santa Cat </b> 2.5 mmt and under stress</p><p style="margin: 0px; padding: 0px;"><b>MGDS</b> 12 mmt with 50% under stress</p><p style="margin: 0px; padding: 0px;"><b>Para and Rondonia</b> 3 mmt and in good shape</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">So if we split out the production north and south of 15 deg S latitude, we get</p><p style="margin: 0px; padding: 0px;">something like this:</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><b>Good soybeans</b> = 30+ 6.5+15.7+ 3 = 55 mmt of potential in good shape(bumper crop)</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><b>Soybeans under stress</b> either yellow or orange alert = 78 mmt</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Of the 78 mmt there are perfect fields growing, there are fields with yellow</p><p style="margin: 0px; padding: 0px;">alert drought stress and some orange spots where soybeans are complete crap.</p><p style="margin: 0px; padding: 0px;">Maybe 20% of the areas are in dire need of water yesterday or are already</p><p style="margin: 0px; padding: 0px;">podding and the potential is fixed. </p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">So, Yes December is critical for maintaining yields.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">This week is dry.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">There is rain in the forecast for next week.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">If these rains hit the areas in need, that can help stabilize the 78 mmt</p><p style="margin: 0px; padding: 0px;">group.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">If these rains miss, we need to start talking about 10% and 20% production</p><p style="margin: 0px; padding: 0px;">hits to those areas south of 15 deg S latitude or the 78 mmt potential at the</p><p style="margin: 0px; padding: 0px;">beginning of the season.</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Place your bets</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">Kory</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">For more info:</p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;">check out <a href="http://www.brazilintl.com">www.brazilintl.com</a></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><br /></p><p style="margin: 0px; padding: 0px;"><br style="background-color: white;" /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com0tag:blogger.com,1999:blog-6180916914060633915.post-73951464661920411412020-08-29T19:49:00.002-07:002020-08-29T20:29:11.222-07:00Sept 1 I've given her all she's got Captain<p>When I think ahead to the 2021 crop year for Brazilian farmer, I cannot help but think of Scotty in an old Star Trek episode: <b>"I've given her all she's got Captain." </b></p><p>I must say I am most impressed with Brazil ports this past season. They pumped out 70 mmt of soybeans in record time- even with Covid.</p><p>The Northern Arc ports keep taking market share from the south. </p><p>Rumo rail is dropping their freight rates for 2021 and 2022. This is giving grain traders some help with locking in margins selling corn and soy ahead for 2021 and 2022. </p><p>Soybean and corn demand is red hot. This past week we have seen new record high prices for both corn and soybeans. This took place while Conab found extra tons from the last few years- even the drought year was bigger than we expected. 2021 we will blow the bin doors out with photon torpedos loaded with soy. </p><p>I get asked questions from non-subscribers as to why? how ? what are the factors for this fantastic Brazilian profitability. Subscribers have been well versed on this the past couple years as I broadcast on all channels regarding FX and BRL above 4:1. The CME no longer matters when FX is 4.50:1, 5.0:1 or 5.50: 1. </p><p>This is not just a language barrier. This is not a Lost in Translation movie. To understand this, I have come to the conclusion that the North American onlooker needs to understand not only Portuguese and Madarin, but also Klingon. </p><p>I say this facetiously with a twinkle in my eye. </p><p>We have seen a dollar rally in soybeans recently. We are above 9 bucks again. I think we have turned the corner from this long term downtrend in soybeans. However, with soybeans trading R$ 130 per sac(old crop), R$ 100 per sac (new crop), and corn R$ 50 (old crop) and R$ 40+ for new crop in Mato Grosso and Parana, I feel like I am on the Halo-deck. What soy and corn fantasy can I create today?</p><p>For the Brazil farmer, it feels like 2012 or 2013 did for the USA farmer without the drought. It feels like they are selling 7+ dollar corn and 16 dollar beans. With the help of FX, i.e. strong Chinese Yuan and cheap BRL, they can still compete with USA looking two years out. The only limiting factor is not enough production. Prior to the Iowa wind storm, the USA farmer was looking at a different Halo-deck experience. Brazil remains competitive in dollar terms. </p><p>Brazil farmer has costs under control for 2021. However, these FX costs will come into play in 2022 for crop inputs and machinery pieces that are imported.</p><p>It all seems so surreal. With only minor crop production problems in Parana and RGDS, how can domestic markets be at record highs?</p><p>In conclusion, as I try to explain this to clients and possible new clients, I feel that not only am I translating Portuguese to English, but at times it seems other worldly. It seems like USA farmer is in one solar system and the Brazilians are in another. I will let the reader decide who the Klingons are? I could make a good case for both given the last few years politics. </p><p>One needs to contemplate as to when the Klingons will decloak? At some point the Federation might have a brief moment to gain some market share? Change in FX? Natural disaster? Change in admin? Inflation and commodity fund interest given the trillions injected by Fedpedos?</p><p>Is it too precocious of me to sign off as the Soy Jedi Master? Or is that too much of a leap? Too much of a juxtaposition for the reader to handle?</p><p>Good Luck with harvest</p><p>Good luck with planting- It will begin in a few days</p><p><b>For more info for services:</b></p><p>Click:</p><p><a href="https://www.brazilintl.com/kory-melbys-ag-newsletter.html">https://www.brazilintl.com/kory-melbys-ag-newsletter.html</a></p><p><a href="https://www.brazilintl.com/vip-consulting.html">https://www.brazilintl.com/vip-consulting.html</a></p><p><b>Closing thought: At what point does one acquire enough wealth that one can trade in his Tri-axle struggle bus for a single axle? </b></p><p><b>Keywords:</b> Brazil soy and corn 2021, Record high prices, BRL, USA/BR ag econ comp, hidden fundamental changes to the market </p><p><br /></p><p><br /></p><p><br /></p>Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-71821206140987836652020-04-25T06:15:00.002-07:002020-05-01T04:09:46.282-07:00Dollar/Real traded 5.74:1<span style="font-family: "times" , "times new roman" , serif;">Much has changed in the past month.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Sorriso soybeans are quoted at R$ 92.00 per sac on April 24, 2020.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">19 years ago on April 12th, 2001, the low for Sorriso soybeans was</span><br />
<span style="font-family: "times" , "times new roman" , serif;">R$ 13.27 per sac. That is a 7:1 change. That is perspective.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Back in April 2001, Chicago soybean low was 4.29. As of Friday,</span><br />
<span style="font-family: "times" , "times new roman" , serif;">May soy was quoted at US$ 8.30 per bu. A 1.93:1 ratio.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Back in 2001 the Dollar:Real was 2:1.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">As of Friday, April 24, 2020, the Dollar/Real traded as wide as 5.74:1.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Needless to say, I am shell shocked like everyone else. I wrote a newsletter</span><br />
<span style="font-family: "times" , "times new roman" , serif;">back in February stating that a close above 4.32:1 would indicate a move</span><br />
<span style="font-family: "times" , "times new roman" , serif;">to 5.20:1 and possibly 7:1 if one factors in inflation. I myself did not</span><br />
<span style="font-family: "times" , "times new roman" , serif;">believe this was possible.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Back in 2001, both the USA farmer and BR farmer were broke.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">What bothered me back in 2001, when I first visited Mato Grosso,</span><br />
<span style="font-family: "times" , "times new roman" , serif;">was that the BR farmer was was expanding by clearing forest and back</span><br />
<span style="font-family: "times" , "times new roman" , serif;">home in Minnesota we were living on CRP, LDP'S, and Pre-vent plant</span><br />
<span style="font-family: "times" , "times new roman" , serif;">checks from the government. How the hell can these guys justify expanding</span><br />
<span style="font-family: "times" , "times new roman" , serif;">was what I was thinking back then. I would justify this by saying, "they have</span><br />
<span style="font-family: "times" , "times new roman" , serif;">FX working for them at 2:1."</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Fast forward to today and Brazil farmer is expanding yet again and back</span><br />
<span style="font-family: "times" , "times new roman" , serif;">home everyone is surviving on MFP, Crop revenue insurance, and PLC payments.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">Everything has changed yet nothing has changed?</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">I have told many on my tours that the one factor that could have halted</span><br />
<span style="font-family: "times" , "times new roman" , serif;">the Brazilian soybean renaissance<span style="font-family: "times" , "times new roman" , serif;"> would have been a smaller USA CRP</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">program. That 40 million acres taken out of production gave Brazil the</span><br />
<span style="font-family: "times" , "times new roman" , serif;">green light to expand. Even though soybeans were 4 dollars in Chicago,</span><br />
<span style="font-family: "times" , "times new roman" , serif;">that was still too high of a price. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">If we did not have 40 million acres in CRP and let the market wash out</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">back then, that would have halted Brazil's advance in Mato Grosso. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Today it is too late. </span></span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">I hear rumblings that the USA needs a temporary set aside program</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">to take acres out of production in USA. Brazilians would say YES!!!</span><br />
<span style="font-family: "times" , "times new roman" , serif;">Please do that !!!!</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">The problem is that new USDA programs intended to help in</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">the short run end up being long term programs.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">There has been talk about paying Brazil farmers to not clear more</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">forest. In essence, a Brazilian CRP program for the Amazon.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Yes, Brazil would like that. The problem is that there is no FSA office</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">to administer, certify, and oversee the program. This would be ripe</span><br />
<span style="font-family: "times" , "times new roman" , serif;">with corruption and abuse. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">There is no correct answer today. We all have been too reliant on China</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">as the supplier of cheap goods and the buyer of our bulk commodities. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">For the time being, FX will protect the Brazil farmer. Sometime in the next</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">12 months the costs of production will start to explode here. Imported goods</span><br />
<span style="font-family: "times" , "times new roman" , serif;">will become more and more expensive at the same time manufactured goods </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;">produced in Brazil </span><span style="font-family: "times" , "times new roman" , serif;">will be harder and harder to export. </span></span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Bulk commodities like soy, corn, cotton, coffee and cattle will be the short</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">term winners in this devaluation game. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Political situation here in Brazil changed a lot this past week with the</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">firing of Minister of Health and the resignation of Minister of Justice Moro.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">There are rumblings that Minister of Ag is next to go.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">This is not the forum to discuss politics.</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">I will do that in a private setting such as the newsletter. </span></span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Back in 2004, 24,000 sqr KM of deforesation occured which</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">was peak soybean expansion year over year. </span><br />
<span style="font-family: "times" , "times new roman" , serif;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Last year, it was 10,000 sqr KM and look at the media attention</span></span><br />
<span style="font-family: "times" , "times new roman" , serif;">Brazil received because of that. I chuckled at the time.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">You think that was a fire? Just wait, I will show you a fire. </span><br />
<a href="https://www.youtube.com/watch?v=SWtyZoN2Vz4"><span style="font-family: "times" , "times new roman" , serif;">https://www.youtube.com/watch?v=SWtyZoN2Vz4</span></a><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Now that's a fire!!!!</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">This August you will being hearing much of this.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">USDA has Brazil expanding by 3-4% for 2021.</span><br />
<span style="font-family: "times" , "times new roman" , serif;">That is now the baseline.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">I ask myself could it be double that?</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Maybe, it is difficult to keep expanding by big</span><br />
<span style="font-family: "times" , "times new roman" , serif;">percentages when the numbers get this big.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Anything that can be produced and generate new</span><br />
<span style="font-family: "times" , "times new roman" , serif;">dollars will be gold in the year ahead.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Buckle up- the new Brazil/Amazon Disney roller</span><br />
<span style="font-family: "times" , "times new roman" , serif;">roaster will be the best ride around.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">For full updates, subscribe to the newsletter or</span><br />
<span style="font-family: "times" , "times new roman" , serif;">VIP level retainer for direct contact with someone</span><br />
<span style="font-family: "times" , "times new roman" , serif;">who has 20 years experience in Brazil.</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<a href="https://www.brazilintl.com/newsletter.html"><span style="font-family: "times" , "times new roman" , serif;">https://www.brazilintl.com/newsletter.html</span></a><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<a href="https://www.brazilintl.com/vip-light.html"><span style="font-family: "times" , "times new roman" , serif;">https://www.brazilintl.com/vip-light.html</span></a><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Stay safe</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Kory</span><br />
<span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">keywords: soybean price history, BRL record high,</span><br />
<span style="font-family: "times" , "times new roman" , serif;">deforesation rates, expectations for 2021</span><br />
<br />
<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-23972997782833498272020-03-31T03:53:00.003-07:002020-04-04T03:49:18.610-07:00BRL:USD 5.20:1 and record high soybean pricesWe are well.<br />
<br />
We are now in week three of full Brazil shutdown.<br />
Brazil has never been so quiet.<br />
Brazilians love their noise, music, and movement in general.<br />
They like to be going somewhere or getting back from somewhere.<br />
<br />
As a Norwegian, I find this social distancing quite refreshing.<br />
In the Brazilian culture, hugging and kissing when greeting<br />
someone or saying goodbye is normal protocol.<br />
<br />
What has happened the past three weeks is so anti-Brazilian<br />
as per the cultural norms. Brazilians are like cats. They like to<br />
purr and be petted. Yes, they like to hiss sometimes when<br />
their latin blood feels betrayed for some reason or another,<br />
but it quickly passes.<br />
<br />
I link this in with the Gaucho tradition of sipping chimarron<br />
tea in the morning and passing the cup around to everyone<br />
in the room or office- even strangers.<br />
<br />
Corona virus has disrupted Brazilian culture - to say the least.<br />
<br />
Personally, I enjoy the isolation and slower pace.<br />
So long as Mcdonalds, Burger King, Dominos, and<br />
Pizza Hut stay open, I am good but getting fatter.<br />
<br />
My son is using Zoom to connect with colleagues and<br />
school classes.<br />
<br />
The ambience of my building has changed. Older people are<br />
worried and do not want to interact anymore- if they do, it<br />
is from a distance. Three weeks ago they would touch you<br />
and not let you go. The main stream media has scared the<br />
bejesus out of them.<br />
<br />
The Brazilian economy is slowing down as per the rest<br />
of the world. This is having a weakening effect on the<br />
Real. I included some charts back in February in my<br />
March newsletter. One chart showed the Real going to<br />
5.20 area and another discounting inflation showed<br />
a potential for 7:1.<br />
<br />
At the time I published them, I did not believe it was<br />
possible to trade 5:1. Low and behold two weeks later,<br />
it became reality.<br />
<br />
This has been a boon for farmers with physical soybeans<br />
and corn to sell. On Monday, March 30, Sorriso soybeans<br />
traded at a new all time high price of R$ 86.00 per sac.<br />
New crop bids are following and are in the R$ 80.00<br />
per sac area for 2021. Many farmers have all their soybean<br />
inputs purchased for 2021. Some were locking in input<br />
prices in January when FX was 4:1. This is a perfect world<br />
for Brazilian farmer at the moment. Win win win......<br />
<br />
At some point, even if it is a year from now, this high<br />
FX will bite them in the ass. Even if you can stay on top<br />
of your variable costs such as fertilizer and chemical, eventually,<br />
the high FX will seep through all costs of production and we will<br />
see higher and higher depreciation costs. The new JD combine,<br />
planter, or tractor will not go up 5% in a year, but maybe 20%<br />
in one year - ouch.<br />
<br />
Brazilian interest rates have dropped to 3.75% which is also a record<br />
low. Interest rates will need to stay low because when a farmer<br />
needs a new tractor or combine in the future, the starting price will be<br />
anywhere from R$ 2 million to R$ 2.5 million Reais to start with.<br />
<br />
I am sure JD will be offering zero% on new 500,000 dollar toys in<br />
USA soon. In Brazil, ponder paying 6 or 7% on a new R$ 2.5 million<br />
item and do that in multiples.<br />
<br />
For the current year and the year ahead, Brazil farmer is in the<br />
drivers seat. Some will have 40%-50% return on variable costs<br />
to plant soybeans and corn in the year ahead.<br />
<br />
There will be much land clearing and prep for the year ahead.<br />
Hang on to your nuts- the numbers will be impressive when they<br />
finally get counted which might take 1 or 2 seasons before Conab<br />
or IMEA gets a handle on things.<br />
<br />
We have seen this the past year with 1 million ha increase in soybean<br />
area. That prep actually started during the trade war year of 2018.<br />
<br />
I have had consults recently on Rumo expansion and also the<br />
implementation of new soybean and corn traits into the Brazilian<br />
market- Conquista, Intacta, and Xtend are all on the horizon and<br />
will be adopted quickly in Brazil.<br />
<br />
Stay safe up there<br />
<br />
Drop me a note if you are interested in becoming<br />
a subscriber or a VIP client.<br />
<br />
agturbobrazil@yahoo.com<br />
<br />
Kory<br />
<br />
Keywords:<br />
Corona, Brazil culture, BR soy expansion,<br />
soybean profitability, Brasilian Real FX<br />
<br />
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<br />
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<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-19684304120164350132020-03-07T02:10:00.000-08:002020-03-17T03:03:26.302-07:00In Brazil, Corn and Soybeans are now sub-products of FX<br />
<div class="MsoNoSpacing">
<span style="font-family: "times new roman" , "serif"; mso-fareast-language: PT-BR;"><a href="https://brazilintl.blogspot.com/2020/03/in-brazil-corn-and-soybeans-are-now-sub.html"><span lang="EN-US" style="color: windowtext; mso-ansi-language: EN-US; text-decoration: none; text-underline: none;">In Brazil, Corn and Soybeans are now sub-products of
FX</span></a></span><span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;"><o:p></o:p></span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<span lang="EN-US" style="color: #333333; font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;">I have been
sending out regular updates to subscribers<br />
on the current pricing dynamic in Brazil.<br />
<br />
I have been pounding the table about FX for months.<br />
<br />
The underlying theme has been when USD:BRL gets above<br />
4:1, Chicago becomes less and less important as a hedging tool<br />
and price discovery mechanism within Brazil.<br />
<br />
I sense the North American producer is not grasping this<br />
and its importance. As long as MFP 3.0 comes, one can<br />
continue to ignore this South American <span style="background: white;">phenomenon.</span><o:p></o:p></span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<span lang="EN-US" style="background: white; color: #333333; font-family: "times new roman" , "serif";">I must admit, I too am surprised that we are trading</span><span lang="EN-US" style="color: #333333; font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;"><br />
<span style="background: white;">above 4.32:1. We hit 4.67 on Friday. </span><br />
<span style="background: white;">There is more talk of 4.80-5.0 in the coming
months.</span><br />
<span style="background: white;">What I have experienced in the past is that when
these forecasts</span><br />
<span style="background: white;">come in, either to an extreme high or low, they
tend</span><br />
<span style="background: white;">not to quite make the projection.</span><br />
<br />
<span style="background: white;">With the BRL, there is never anyone that
forecasts that the</span><br />
<span style="background: white;">new trend i.e. 4:1 to 4.67, but when the break
out comes,</span><br />
<span style="background: white;">everyone sees it going to 5:1. This is called
bullshit.</span><br />
<br />
<span style="background: white;">In January, when FX was 4:1, the projections by
major banks</span><br />
<span style="background: white;">were for 3.80:1 for the year. When we broke out
of the 4.32:1 </span><br />
<span style="background: white;">Nov 2019 high, then the forecasts flipped to how
high we can go. </span><br />
<br />
<span style="background: white;">To the chagrin of many, the Brazilian economy is
quite stable.</span><br />
<span style="background: white;">Low inflation, low interest rates, and an admin
that has and still</span><br />
<span style="background: white;">wants to cut spending. The Brazilian GDP has
been cut from 2.5%</span><br />
<span style="background: white;">to 1.5% for 2020 because of Corona, but even so,
this is quite</span><br />
<span style="background: white;">stable. It looks like Brazil will cut the Selic
rate to 4% soon.</span><br />
<br />
<span style="background: white;">The Brazilian farmer is selling his crop quickly
and getting 2021</span><br />
<span style="background: white;">sold too. Soybean prices in Mato Grosso are
trading at the highest</span><br />
<span style="background: white;">level since July 2016(the drought year).
Meanwhile, Chicago soybeans</span><br />
<span style="background: white;">are trading near contract lows. Corn prices in
Mato Grosso feel like</span><br />
<span style="background: white;">US$ 7.00 per bu in Chicago. </span><br />
<br />
<span style="background: white;">When we talk about sub-products with soybeans
and corn, we</span><br />
<span style="background: white;">tend to think of ethanol, DDGs, corn syrup,
soybean oil and meal.</span><o:p></o:p></span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<span lang="EN-US" style="background: white; color: #333333; font-family: "times new roman" , "serif";">The value of soybeans and corn in Chicago are derived from what</span><span lang="EN-US" style="color: #333333; font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;"><br />
the sub-products are worth on the global stage.<br />
<br />
<span style="background: white;">In Brazil, when FX is at 4.60, we can start to
think of corn and soybeans</span><br />
<span style="background: white;">as sub-products of the USD FX. </span><br />
</span></div>
<div class="MsoNoSpacing">
<span lang="EN-US" style="background: white; color: #333333; font-family: "times new roman" , "serif";">If the Corona virus wanes and economic activity picks up and the Dollar</span><span lang="EN-US" style="color: #333333; font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;"><br />
<span style="background: white;">declines, we can get back to normal.</span><br />
<span style="background: white;">However, if we do trade up to 5:1 on a
USA/Global meltdown, the</span><br />
<span style="background: white;">Brazilian farmer need not even look at a Chicago
quote screen.</span><br />
<br />
<span style="background: white;">It will not matter. FX is the driver- not supply
and demand. </span><br />
<br />
<span style="background: white;">The Brazilian farmer and USA farmer live in two
different worlds</span><br />
<span style="background: white;">at the moment.</span><br />
<br />
<span style="background: white;">The Brazilian farmer sees a bull market and is
preparing for 2021</span><br />
<span style="background: white;">and 2022 accordingly i.e. expansion of
production. </span><br />
<br />
<span style="background: white;">The USA farmer sees a bear market and is
preparing accordingly i.e</span><br />
<span style="background: white;">crop insurance revenue protection, PLC/ARC
payments, and potential</span><br />
<span style="background: white;">for MFP 3.0. In other words, producing for below
the cost of production</span><br />
<span style="background: white;">unless max yield is achieved. This reminds me of
the LDP mindset of the</span><br />
<span style="background: white;">90s. <o:p></o:p></span></span></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
<span lang="EN-US" style="background: white; color: #333333; font-family: "times new roman" , "serif";">Lots of interest in RUMO these days. Railroad expansion and who will</span><span lang="EN-US" style="color: #333333; font-family: "times new roman" , "serif"; mso-ansi-language: EN-US; mso-fareast-language: PT-BR;"><br />
<span style="background: white;">get the Ferrograo concession scheduled for
June. </span><br />
<br />
<span style="background: white;">For those paying attention, now is the time to
send money to Brazil.</span><br />
<br />
<span style="background: white;">Drop me a note if any questions.</span><br />
<br />
<span style="background: white;">agturbobrazil@yahoo.com</span><br />
<br />
<span style="background: white;">Happy Easter</span><br />
<br />
<span style="background: white;">Kory</span><o:p></o:p></span></div>
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-8147762322700135792020-01-05T03:20:00.000-08:002020-01-12T11:34:20.547-08:00Happy New YearThe start of the 2020 growing season has been one<br />
of below normal rainfall. Rains are now more general at<br />
the start of 2020.<br />
<br />
Mato Grosso has a record soybean crop on deck. Given<br />
all the attention to the Amazon back in August, I must<br />
ask myself where the media is today?<br />
<br />
France offers to help Brazil back in August and the<br />
aid is declined. Today, Brazil offers to help Australia.<br />
<br />
<b>Bottom line to all of this:</b> In August, that is the burning<br />
season for Brazil. Australia is on fire in December, and<br />
it is not the burning season. It seems to me that is the<br />
story and not the former.<br />
<br />
<b>Flip side: </b>Is burning and clearing increasing in Brazil? <b> Yes</b><br />
<br />
It looks like 10,000 square KM were cleared in 2019.<br />
I am not surprised by this as I predicted this in the August newsletters.<br />
But, to keep things in perspective, back in 2004, the clearing rate<br />
was 24,000 sq Km. So, even though we have seen an increase in<br />
clearing, we are still at 40% of the previous peak. That was happening<br />
before social media was so passionate or should I say fickle?<br />
<br />
I still say the bigger story is what has happened since 2004.<br />
24,000 sq KM or 10,000 square miles were opened in one year.<br />
That is 277 townships. Today, those 277 townships all have<br />
70 bu beans on them.<br />
<br />
We have had some problems in RGDS, Bahia, and Piaui. There has<br />
been some loss in 1st crop corn and need for replanting of soybeans<br />
in the Northeast. It will take time to see how this plays out.<br />
<br />
Brazil economy looks to be starting out on a firm note. 2.3%<br />
growth for the year ahead is the projection so far.<br />
<br />
The price of beef is at record highs.<br />
<br />
Old crop corn prices are very firm. Brisk export pace and<br />
increasing domestic demand combined with a shrinking first<br />
crop has created some fear in the market.<br />
<br />
Look for imports of corn from ARG and USA in coming months.<br />
<br />
FX has stablized for the time being after peaking in late November<br />
at 4.27:1. This gets the animal spirits flowing in AG.<br />
<br />
Mato Grosso's 3rd 100% corn only ethanol mill will come<br />
online in late January. This mill will be 210 million gallon<br />
capacity when complete. It is huge.<br />
<br />
Looking forward, April rains will determine how Brazil<br />
shakes out this year for soy, corn, and cotton.<br />
<br />
Will Brazil produce 120 mmt of soy or a 125 mmt?<br />
<br />
Will Brazil produce 85 mmt of corn or 100 mmt?<br />
<br />
Even with expanded cotton area, will Brazil be able<br />
to repeat the 2019 record productivity in cotton?<br />
<br />
The BR 163 highway is complete to Mirituba, Para.<br />
This is along the Tapajos River where barges can be loaded<br />
and transfered to ports at Belem.<br />
Trucks will be zipping north during soybean harvest.<br />
We can now measure turn around time in hours and days,<br />
compared to the last few years, when trucks would disappear for<br />
weeks and even months at a time into the jungle.<br />
I look for these northern ports to increase volumes from about 6 million<br />
tons in 2019 to possibly 10 mmt or more in 2020.<br />
Freight rates have dropped from US$ 60 per ton to ship north in 2019<br />
to US$ 40 per ton in 2020. This is a game changer.<br />
<br />
I have increased the price of my newsletter to US$ 600 per year.<br />
<br />
VIP light with consult time and special send outs are now US$ 3250 per year.<br />
<br />
VIP professional level remains at US$ 6000 per year.<br />
<br />
Drop me a note at agturbobrazil@yahoo.com for more info.<br />
<br />
www.brazilintl.com<br />
<br />
Keywords: Amazon, soybeans, corn, freight rates, Brazil production,<br />
deforestation rates, historical comparison<br />
<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-38281786889338359132019-10-20T02:55:00.000-07:002019-10-20T09:00:31.237-07:00Oct 20th blog updateIt has been awhile since a blog update.<br />
<br />
I have been focusing on the newsletters.<br />
<br />
Soybean planting has been closer to the 5/6 year average<br />
pace. Compared to last year, it seems late.<br />
<br />
Western Parana is the area of concern again.<br />
Much unplanted and many will be replating<br />
due to hot dry weather.<br />
Any replanting areas will not have a chance for<br />
2nd crop corn. It will be planted in March 2020 and<br />
it will not be viable.<br />
<br />
BR Corn prices have spiked in the last two weeks.<br />
The market is sensing it will not have the extra<br />
tons to ship willy nilly in 2020.<br />
<br />
Domestic corn demand continues to rise with<br />
increased corn ethanol production, increased<br />
pork and chicken production too. China<br />
has been buying pork, chicken and a fair amount<br />
of 2020 soybeans too.<br />
<br />
Port bids for new crop soy have tanked which makes<br />
Brazil new crop soybeans cheaper than USA at the moment.<br />
<br />
I think Brazil can still produce a decent soybean crop,<br />
but the total corn production will drop in 2020.<br />
We will not be producing 100 mmt of corn.<br />
<br />
Rain is in forecast for Goiania for Monday. It has been<br />
95 and clear skies most of the time. We have had two shots<br />
of rain and they were light. After this rain chance,<br />
it is to turn hot and dry again into November. That is<br />
when the good rains are set to come. Very late indeed.<br />
<br />
Back home in NW Minnesota is a battle. Record amounts<br />
of rain for Sept and Oct. Some areas getting 15 inches in<br />
a little over a month. Big rains are not unheard of, but to<br />
get rains like this in late Fall, that is strange.<br />
<br />
Many have bought tracks for combines. Several have<br />
tracks on combines year round from previous experience.<br />
Soybean basis has narrowed to minus 1.18 under Chicago<br />
which is actually quite good. Last year at this time, we were<br />
circa - 2.50 under CME.<br />
<br />
We have a decent soybean crop, but it is hard to know how much will<br />
get harvested. Ideally, the ground would freeze into November and go on<br />
the frost. But if it snows, they are screwed. If it freezes, that means<br />
no tillage, and that creates new problems for 2020.<br />
Minimal fertilizer sales, seed sales, and much talk of pre-vent<br />
plant for 2020. Without a significant rally in Chicago, the<br />
attitude will be to say screw it.<br />
<br />
I can only imagine what bankers are thinking. Many operations<br />
were on thin ice last winter, I can only imagine what the discussions<br />
will be this winter.<br />
<br />
This is the problem with precision ag, when it works and conditons<br />
are nice, it sure can produce a nice crop with all the passes.<br />
But, when conditions turn sour, what good are GPS, globes and<br />
high tech screens when one is just trying to stay afloat, much<br />
less, stay straight. Do the micro nutrient passes and fungcides<br />
matter when the crop is covered in snow?<br />
<br />
It does make you wonder?<br />
<br />
I know I sound like a pessimistic party pooper, but I am looking<br />
at those who are in survival mode verses those who spend for<br />
top yeilds all the time. Who will be right?<br />
<br />
I have told many tour groups that have come to Brazil.<br />
All the technology that is being developed from GPS, high<br />
speed planters and prescription farming plans are all great,<br />
but we will see a time where we cannot afford this in USA<br />
on 80 acre tracts here and there and all this stuff will be applied<br />
down here on the 5000 to 10,000 hectare blocks of land where<br />
they produce 2 or 3 crops per year consistantly.<br />
<br />
I know it is a tough pill to swallow. I do not like making<br />
the statement. But, I fear it is closer to reality that we<br />
realize.<br />
<br />
We seem to have some sort of trade deal on the horizon.<br />
Great<br />
<br />
The 50 billion number makes a guy wonder.<br />
I doubt the Chinese will damage the Brazil relationship.<br />
I think USA will go back to a normalized soybean run of<br />
30 mmts and Brazil will stay at 40 mmt+ for the near future.<br />
<br />
The surprise might come from a corn, wheat, ethanol, DDG's,<br />
lumber, or cotton mega purchase from USA.<br />
The bull market is likely sleeping yet in some other<br />
commodity outside of soybeans.<br />
<br />
I will continue to update subscribers in Real time.<br />
<br />
Thanks for all the 2020 renewals.<br />
<br />
Much appreicated<br />
<br />
Kory<br />
<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-11318756851329187262019-08-24T09:14:00.003-07:002019-09-13T09:57:56.804-07:00Aug 24th Amazon fires, media distortion, and unintended consequences My Brazil experience is now coming up on 20 years. Much of that time in<br />
Mato Grosso and the transitional rain forest.<br />
<br />
I am not an environmental expert. However, I am more of an expert<br />
than many on twitter this past week. When I saw images of elephants,<br />
kangaroos, and koalas in the Amazon, I knew the media had gone too far.<br />
<br />
I think Taylor Swift has it right:<br />
<i>"<span style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">You need to calm down, you're being too loud</span></i><br />
<i><span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">And I'm just like oh-oh, oh-oh, oh-oh, oh-oh, oh-oh (oh)</span><br style="background-color: white; color: #222222; font-family: arial, sans-serif; font-size: 14px;" /><span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">You need to just stop"</span></i><br />
<div>
<span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;"><br /></span></div>
<div>
I wish some of the movie stars that are so concerned about the</div>
<div>
Amazon would come down for a tour. I would love to educate them. </div>
<div>
<br /></div>
<div>
I watched Bill Maher this morning. I like him. I do not always</div>
<div>
agree with him, but I like his style. Friday night he too showed</div>
<div>
his ignorance about Brazil. He showed the common white man</div>
<div>
tendendency to look at Brazil as a colony.</div>
<div>
<br /></div>
<div>
"Someone should just buy the Amazon" Someone like George Soros.</div>
<div>
This made me angry and I am a fake Brazilian. I am a guest here. </div>
<div>
<br /></div>
<div>
Brazil has been colonized for centuries by Spain, England, and</div>
<div>
Portugal. Brazil has had their resources stolen time and time again.</div>
<div>
<br /></div>
<div>
Here is a newsflash. THE AMAZON IS NOT FOR SALE.</div>
<div>
The Amazon is Brazil's. Period !!!!</div>
<div>
If you do not undertsand this, go back and read Brazil's</div>
<div>
history. They have a right to be <i>Xenaphobic</i> about this.</div>
<div>
<br /></div>
<div>
Obviously the Amazon is important to the whole world.</div>
<div>
However, the northern hemisphere countries are trying to</div>
<div>
dictate to Brazil how the Amazon should be preserved.</div>
<div>
<br /></div>
<div>
I would suggest the following, instead of trying to tell</div>
<div>
Brazil what to do and criticize them, they should offer</div>
<div>
an open invitation. "<i>Hey Brazil, if you need some</i></div>
<div>
<i>help with enforcement or resources, give us a call</i>"</div>
<div>
<b>Do not tell BRAZIL what they should be doing. </b></div>
<div>
<b><br /></b></div>
<div>
I wrote in my July 2018 newsletter on how the trade</div>
<div>
war is likely to cause unintended consequences in the</div>
<div>
market place and where crops are grown.</div>
<div>
<br /></div>
<div>
I wrote in my June 2019 newsletter about how new lands</div>
<div>
are being cleared in northern Mato Grosso. An example</div>
<div>
was 5000 ha of forest was purchased and now 1000 ha was</div>
<div>
being opened for rice production. Soybeans will come</div>
<div>
later. </div>
<div>
<br /></div>
<div>
After the updated forest code of 2012 that made clearing</div>
<div>
of forest more restrictive and required 80% of the area</div>
<div>
be left as <b>permanent reserve</b> and 20% for crops, the</div>
<div>
clearing of land has been very subdued. In my opinion,</div>
<div>
the new forest code was too restrictive. </div>
<div>
The 80/20 line is north of 13 deg S latitude.</div>
<div>
<br /></div>
<div>
The new administration pulled the environmental oversight</div>
<div>
officials out of many Amazon locations. This agency is</div>
<div>
known as Ibama and they send out fines and impound</div>
<div>
soy grown on illegally deforested tracts. </div>
<div>
<br /></div>
<div>
I can give an example of a producers frustration with</div>
<div>
the system. I know an American who cleared land</div>
<div>
in NE MT back in early 2000s. He then sold the land</div>
<div>
to a Brazilian in about 2014. After he sold it, he found out</div>
<div>
that a tract of the farm was impounded because he cleared</div>
<div>
it after a specific date even though he had license to clear it. </div>
<div>
<br /></div>
<div>
The fine then starts going back to beginning with fees and</div>
<div>
surcharges. A small fine can quickly become millions</div>
<div>
of Reais. He paid the fine and assumed all was good.</div>
<div>
Example would be, you get a speeding ticket, pay the fine,</div>
<div>
and you are good to go. </div>
<div>
<br /></div>
<div>
In this case, you need to re-record that your land is free and</div>
<div>
clear. He did not know that. He then got another new fine.</div>
<div>
Also, he is unable to complete the contract for deed sale of </div>
<div>
the land which until today remains unsettled. </div>
<div>
This is the kind of nonsense that Bolsonaro and his</div>
<div>
admin are trying to help producers with. Solve the old</div>
<div>
problems on the books so farmers can move forward. </div>
<div>
<br /></div>
<div>
<b>Unintended consequences</b></div>
<div>
<b><br /></b></div>
<div>
In 2018 we have a USA/China trade war.</div>
<div>
China responds with new tariffs on USA ag</div>
<div>
products.</div>
<div>
<br /></div>
<div>
China looks to South America to fill in their</div>
<div>
soybean needs. The port premium goes to</div>
<div>
US$ 2.50 over Chicago futures in Sept at the</div>
<div>
same time the FX BRL goes to 4.20:1 because</div>
<div>
of the Brazilian election. It was the best of</div>
<div>
times for Br farmer. Due to the lateness of the</div>
<div>
boom, he was unable to increase soybean area</div>
<div>
to the level the domestic market was telling him to.</div>
<div>
<br /></div>
<div>
So here we are a year later, BRL is back to 4:1,</div>
<div>
we have soybean prices making new highs in Brazil,</div>
<div>
soybean port premiums are + 1.50 USD over Chicago</div>
<div>
and we are surprised by some smoke in the Amazon?</div>
<div>
Come on- get a clue or atleast buy my newsletters</div>
<div>
so you know what is going on.</div>
<div>
<br /></div>
<div>
I am pleasantly surprised there is not a lot more</div>
<div>
smoke in the Amazon. This is normal.</div>
<div>
It is August, it is burning season.</div>
<div>
The rains come in less than three weeks, if you </div>
<div>
are going to burn, you need to do it now !!!!!</div>
<div>
It is too wet the rest of the year !!!!</div>
<div>
<br /></div>
<div>
Back in 2003-2005, now that was smoke.</div>
<div>
We are probably 10-15% of peak burning </div>
<div>
like that of the early 2000s. What is the major</div>
<div>
difference? We did not have any social</div>
<div>
media back then !!!</div>
<div>
<br /></div>
<div>
<b>Solutions</b></div>
<div>
<br /></div>
<div>
Over the years I have heard a common theme</div>
<div>
among farmers as to how to solve this.</div>
<div>
<br /></div>
<div>
Basically this would be a Brazilian CRP program</div>
<div>
for the reserve areas. This would incentivize the</div>
<div>
Brazilian land owner to self monitor. </div>
<div>
<br /></div>
<div>
For those who do not know what CRP is in USA,</div>
<div>
it was the conservation reserve program that started</div>
<div>
in 1986. It took highly erodible and wetlands out</div>
<div>
of production for periods of up to 10 to 15 years at a time.</div>
<div>
<br /></div>
<div>
It was started to help bail out the banks and broke</div>
<div>
farmers from the 80's. It morphed into a farmer</div>
<div>
retirement program. It later morphed into a fixed</div>
<div>
income investment for small and medium size</div>
<div>
investors that could get 4-6% ROI from the </div>
<div>
government. The investor would buy the land </div>
<div>
and the contract went with. </div>
<div>
<br /></div>
<div>
In this environment of low interest rates, CRP</div>
<div>
as part of your portfolio has been quite attractive.</div>
<div>
Also, many use this land for hunting in the fall and</div>
<div>
it tends to be a nice tax deductable recreational</div>
<div>
trip to check on the CRP each year. </div>
<div>
<br /></div>
<div>
In Mato Grosso and elsewhere, we have 3 tiers of</div>
<div>
reserve requirements for land. </div>
<div>
<br /></div>
<div>
20% reserve 80% open Cerrado</div>
<div>
35% reserve 65% open Cerrado</div>
<div>
50/50 forest areas and Mato Grosso law</div>
<div>
80% reserve 20% open new forest code north of 13 deg S lat</div>
<div>
<br /></div>
<div>
There has been talk about paying land owners on their reserve</div>
<div>
area to preserve it -try to disincentivize its deforesation. </div>
<div>
<br /></div>
<div>
On paper this would work. It would take a big fund.</div>
<div>
It also would take a FSA office type agency in each</div>
<div>
county to oversee. </div>
<div>
<br /></div>
<div>
In the short term, it would throttle back expansion.</div>
<div>
<br /></div>
<div>
However, in the long term, I think the program would</div>
<div>
follow the evolution of the CRP program in the USA.</div>
<div>
They mean well in the beginning.</div>
<div>
But once consolidation of large blocks or groups of</div>
<div>
farms start being bought out by investment funds</div>
<div>
just for the revenue stream, one might regret what it</div>
<div>
looks like after 10 or 20 years of investment bankers</div>
<div>
calculating current present value of a 30 or 50 year</div>
<div>
Brazilian CRP contract. In a negative interest</div>
<div>
environment, the land values would explode off the charts.</div>
<div>
<br /></div>
<div>
So I repeat, Bill Maher, Amazon is not for sale. </div>
<div>
<br /></div>
<div>
I will close with a bit of irony and maybe a bit</div>
<div>
of a paradox for some.</div>
<div>
<br /></div>
<div>
You know what is saving the Amazon today?</div>
<div>
<br /></div>
<div>
ASF</div>
<div>
<br /></div>
<div>
yes, African Swine Fever in China.</div>
<div>
<br /></div>
<div>
If it were not for this disease and China's animal</div>
<div>
rations dropping by 10 to 15 million tons, we would have</div>
<div>
had a hell of a lot more smoke in the Amazon this year.</div>
<div>
<br /></div>
<div>
China is a major factor as to how this all unfolds in</div>
<div>
coming years. </div>
<div>
<br /></div>
<div>
As I stated at the beginning; CALM DOWN</div>
<div>
<br /></div>
<div>
<span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">"You need to calm down, you're being too loud</span><br />
<span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">And I'm just like oh-oh, oh-oh, oh-oh, oh-oh, oh-oh (oh)</span><br />
<span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;">You need to just stop"</span></div>
<div>
<span jsname="YS01Ge" style="background-color: white; color: #222222; font-family: "arial" , sans-serif; font-size: 14px;"><br /></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">I am happy to discuss this, but I do charge for my service.</span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">The rate is US$ 500 per hour.</span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;"><br /></span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">No exceptions for journalists. </span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;"><br /></span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">Go to my website and push some buttons if you</span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">want to talk. </span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;"><br /></span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">Have a great week.</span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;"><br /></span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">I can't wait for the rainy season to start in 3 weeks.</span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;"><br /></span></span></div>
<div>
<span style="font-family: "arial" , sans-serif;"><span style="background-color: white; font-size: 14px;">Kory</span></span></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
<br /></div>
Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com1tag:blogger.com,1999:blog-6180916914060633915.post-3258105051873015252019-07-14T06:36:00.001-07:002019-07-15T08:11:22.462-07:00July 15 Looking ahead to 2020Corn harvest is zipping along. Mato Grosso planted<br />
a record area and also a record yield this year - 31 mmt is<br />
the forecast.<br />
<br />
One corn ethanol mill is running at full throttle and<br />
pumping out 1.5 million liters per day from corn.<br />
<br />
Two more will fire up in coming months. Sinop<br />
in August and Sorriso by Feb 1, 2020.<br />
<br />
The Nova Mutum mill project is on hold at moment.<br />
Mato Grosso is pondering the elimination of ethanol<br />
tax incentives within the sate. This is a silly move on their<br />
part, but we will know the status by July 31. The incentives<br />
need to be extended by then. I think they will find an alternative<br />
to this, if they do not, that will choke off the corn ethanol expansion<br />
within the state.<br />
<br />
With the late planting and potential crop losses in USA, corn<br />
prices have been quit firm the past month. Many farmers are<br />
selling 2020 crop too.<br />
<br />
Conab finished out the soybean crop at 115 mmt. Private<br />
forecasts and USDA are at 117-118 for this past year.<br />
I said back in late Janaury, I expect to drop to 115 and<br />
then stand pat. Given the dry weather at the time, I dropped<br />
to 114. Many others were thinking 101 to 108 to 110.<br />
Given a crop size potential in the 123 to 125 mmt at the time,<br />
we need to becareful with these lowball numbers. Rule of<br />
thumb is that when a region of Brazil is going through<br />
a crop loss, it is difficult to lose more than 10 mmt in any<br />
given year. Another region tends to compensate and that<br />
is what happened this year. RGDS came in at 19 mmt.<br />
Who wudda thunk? Impressive gains from previous<br />
drought where they only produced 6.8 mmt.<br />
<br />
If corn prices start to rock and roll in the coming weeks,<br />
it is the southern states that can reverse trend and switch<br />
from soy to 1st crop corn. The July newsletter outlined<br />
that potential.<br />
<br />
Land clearing and expansion is occuring in northern<br />
Mato Grosso. It is legal. 20% of a given area is being<br />
opened. 1st crop tends to be rice.<br />
<br />
Pension reform is moving right along. Brazil stock market<br />
is at record highs and FX is back to 3.75 after trading<br />
4.10:1 not too long ago.<br />
<br />
BR 163 is looking good. The tough spot where trucks<br />
have been spinning out upon a long incline has been<br />
paved. Soybeans will move smoothly to the north<br />
this wet season in February 2020. I doubt we will<br />
see videos of stuck trucks again.(at least not along<br />
BR 163)<br />
<br />
Lots of talk about railroads and extensions.<br />
All of this has been talked about in newsletters.<br />
<br />
The 1st half of 2019 has been a flop for Brazil<br />
economy; (.8% growth in GDP). If not for ag,<br />
Brazil would be going backwards.<br />
The 2nd half of 2019 should show some growth.<br />
Good machine sales and closed financing contracts<br />
combined with factory orders.<br />
<br />
I keep hearing reports that the limit on land that<br />
can be owned by foreigners will be overturned<br />
yet this year.<br />
<br />
Some land sales have been confirmed in Mato Grosso.<br />
Turn key farms and also forest and land clearing<br />
projects.<br />
<br />
Pork sales have been brisk to Russia and China<br />
in June.<br />
<br />
I have received a 420 page report that outlines the<br />
future production potentials of crops and volumes<br />
to be moved by road, rail and water.<br />
It is in Portuguese. I will use snipets of this<br />
document in future newsletters.<br />
<br />
Upward and onward.<br />
<br />
good luck with harvest<br />
Kory<br />
<br />
Keywords:<br />
soy crop size, corn harvest, corn ethanol, Brazil econ,<br />
new land clearing and future production and shipping volumes.<br />
<br />
<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com6tag:blogger.com,1999:blog-6180916914060633915.post-19761308052304191192019-05-21T13:30:00.002-07:002019-05-25T10:31:05.429-07:00The Soybean Wars<b>May 21 Blog update:</b><br />
<br />
In my July 2018 newsletter, I asked the question: Is it possible<br />
that soybeans are the wheat of the 80s?<br />
<br />
With the USDA announcement today of US$ 2 dollar<br />
per bushel soybean payments, I think I have my answer.<br />
For the government to announce something like this<br />
during planting season is mind blowing. Many areas plant<br />
soybeans until July- especially the double crop areas.<br />
<br />
We have a situation where the market is telling the world<br />
to back off 10 million acres or 15 million tons.<br />
With a US$ 2.00 payment to USA farmer, that tells<br />
them to put the pedal to the floor. It does not matter<br />
if payments are decoupled and they use past history.<br />
If payments are coming, the farmer will plant.<br />
<br />
I think back to the 80s. I am a product of deficiency payments,<br />
CRP, and grain storage programs.<br />
I remember needing every penny we could get from USDA and<br />
then along comes Gramm/Rudman and knocks 15% off our<br />
checks in 1985. We need to balance the budget was the matra.<br />
<br />
In the 90s we got paid on 85% of our base acres.<br />
<br />
We put 36 million acres into CRP and in the 2000's<br />
Brazil, Argentina and others add 36 million acres and<br />
more to the world stage with the help of double crop acres too.<br />
<br />
The national debt at the time was 5 Trillion. Today, it is damn near<br />
22 Trillion dollars. Today, we receive notice that 20 billion more can<br />
come in assistance. God, how we could have used that back in the<br />
80s and 90s instead of fight for crumbs.<br />
<br />
The irony of all of this is that if the USDA had the will power back in<br />
the 80s to send out money like this and a reduced CRP program,<br />
the USA could have bankrupted the Brazilian/Mato Grosso soybean<br />
farmer before he had a chance to start.<br />
<br />
By the time 18 dollar beans came along, the environmental oversight<br />
would have nipped expansion in the bud -20% to 30% open instead of<br />
80% in areas.<br />
<br />
Today, I fear it is too late. If Washington thinks they are going to<br />
break the Brazilian farmer- think again.<br />
Today, Brazil enters the Real Trade war. This is now a fight<br />
to the death. This is now a blood sport.<br />
<br />
The trade war creates a strong dollar scenario and that only<br />
entices them more down here. Soybeans are sold in dollars.<br />
<br />
Brazil's infrastructure gets a little bit better each year. China is ready<br />
to invest more into Brazil. The FX at 4:1 protects the Brazilian farmer<br />
for the time being.<br />
<br />
The Brazil farmer has said for over 10 years, <b>"pay us something for</b><br />
<b>our reserve area and we will leave it alone."</b> The 50%-80% that<br />
new areas need left alone.<br />
<br />
I sometimes wonder if it might have been cheaper for USA and the World<br />
to have paid the Brazilian farmer an Amazon CRP payment of sorts to do<br />
nothing with the frontier area, than to pay the USA farmer not to plant<br />
highly erodible soils and wetlands.<br />
<br />
With today's announcement, we will now find out who the low<br />
cost producer is? How many 250,000 dollar planters do we need<br />
to plant US$ 4 dollar soybeans in North Dakota?<br />
<br />
Someone needs to blink, but 2019 is not the year. Unless we can freeze<br />
these beans in Sept and knock 500 million bushel off, we have a paradigm<br />
shift ahead with regards to soybeans as signifcant as Round UP ready<br />
technology was to corn and beans- only in reverse.<br />
<br />
How many years will soybeans be stored if the government payments<br />
keep coming?<br />
<br />
As my Brazilian friends have always said, you guys will be OK,<br />
you guys have the Federal Reserve. You will just print more money.<br />
It is no wonder Brasilians and others think dollars grow on trees.<br />
Just go get some more. It is easy for you guys.<br />
<br />
This is going to create more and more hard feelings between<br />
hemispheres now. In 2018 Brazil and ARG could enjoy the<br />
trade war and profit from it.<br />
<br />
With MEGA government payments in phase II, now the bleeding<br />
begins? Who is first?<br />
<br />
<br />
Kory<br />
<br />
Keywords: Soybean history, government payments, trade war,<br />
low cost producer, FX<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com13tag:blogger.com,1999:blog-6180916914060633915.post-64674141643157696252019-04-20T04:42:00.002-07:002019-04-22T06:59:44.346-07:00April 20th blog updateIt seems like most private crop forecasters have the<br />
<div>
BR soybean crop at 115-118 mmt.</div>
<div>
<br /></div>
<div>
This is a marked increase since February.</div>
<div>
Most everyone was in the 111-114 mmt club.</div>
<div>
<br /></div>
<div>
Aprosoja was the outliar saying the crop could</div>
<div>
be as small as 101 mmt. </div>
<div>
<br /></div>
<div>
I think it is worth noting how significant RGDS is in</div>
<div>
soybean production. With the losses in Parana, RGDS is</div>
<div>
the 2nd largest soy producer behind Mato Grosso at 18.7 mmt.</div>
<div>
<br /></div>
<div>
If we look back to the previous major drought for the southern</div>
<div>
states, that was 2011-2012 crop year. RGDS came in at 6.5 mmt.</div>
<div>
It was bad. Since then, acreage shift away from corn, rice and</div>
<div>
productivity gains have allowed RGDS to rebound to near 19 mmt.</div>
<div>
This is + 300% from their low point. This has nothing to do</div>
<div>
with deforestation or expansion in the northern areas. This is simply</div>
<div>
good farmers doing their best. </div>
<div>
<br /></div>
<div>
We can look at 2018-19 crop year two ways. If this crop is at </div>
<div>
115 mmt+, then last year's crop was greatly understated. If we assume</div>
<div>
8-10 mmt were lost from peak potential, that means last year was</div>
<div>
a 123 mmt+ crop size and this year we had 125 mmt at one time. </div>
<div>
<br /></div>
<div>
The flip side is: If last year's crop was 120 mmt, then this year's crop</div>
<div>
size is too high and we need to look at Conab's numbers at 113.8 mmt</div>
<div>
as being more accurate. </div>
<div>
<br /></div>
<div>
Ths USDA at 117 mmt and the Brazil FAS office at 113.6 mmt is very</div>
<div>
confusing. Does the left hand know what the right hand is doing?</div>
<div>
<br /></div>
<div>
Going into 2020, it sure looks like we can pencil in 125 mmt for a </div>
<div>
starting point for next year's crop. This is not what the USA farmer</div>
<div>
wants to hear and the Brazilian farmer needs to grasp that there</div>
<div>
are too many beans in the world. The trade war now has everyone</div>
<div>
on equal terms. The 2018 BR windfall is over. That was a once in a </div>
<div>
lifetime illusion. March 2020 soybean premiums are only 8 cents</div>
<div>
over CME. </div>
<div>
<br /></div>
<div>
China now has North and South America by the short hairs. </div>
<div>
<br /></div>
<div>
At the moment, FX is helping the Brazilian soy and corn farmer.</div>
<div>
FX is helping them maintain profitability. </div>
<div>
<br /></div>
<div>
The 2nd crop corn in Brazil will be beyond fantastic. 75 mmt + 25 mmt</div>
<div>
for 1st crop should allow for a total corn crop output of 100 mmt+.</div>
<div>
<br /></div>
<div>
FS bioenergy has announced the site for their 3rd corn ethanol mill.</div>
<div>
The plan is for two more- right place at right time.<br />
The first mill is pumping out 1.5 million liters per day of ethanol +<br />
DDG's. </div>
<div>
<br /></div>
<div>
There is talk of a truckers strike starting April 29th. Contacts tell me</div>
<div>
it is just a few on social media stirring the pot. Nothing will happen. We will see.</div>
<div>
Brazil cannot handle another shutdown like last year. </div>
<div>
The new admin is between a rock and a hard place. They encouraged</div>
<div>
the truckers last year as it was a political windfall for them to have this happen.</div>
<div>
Now, the shoe is on other foot. Crude oil keeps rising and FX is near 4:1.</div>
<div>
This was not in the plan back in January. This puts pressure on Petrobras</div>
<div>
to keep increasing fuel prices every two weeks and this is squeezing the</div>
<div>
truckers again. Soy sales have been slow, so there have been trucks hauling</div>
<div>
freight for below the minimum price table. This table is still being reviewed</div>
<div>
for its constitutionality. </div>
<div>
<br /></div>
<div>
The new admin wants to privatize Petrobras, but just last week the govt</div>
<div>
intervened and asked Petrobras to delay a fuel price increase as per fear of</div>
<div>
a truckers strike. They cannot have it both ways.</div>
<div>
<br /></div>
<div>
The FX market looks at these shenanigans with fear that the govt will also</div>
<div>
fold their hand with regards to pension reform. Thus, we are hugging</div>
<div>
4:1 again, which was not forecasted by anyone in January. We should</div>
<div>
be trading at 3.30- 3.50:1 given the optimism at the beginning of the</div>
<div>
year. Therefore, Brazil GDP forecast has now been lowered to 1.8% for</div>
<div>
the year. </div>
<div>
<br /></div>
<div>
I have heard that Representative Collin Peterson from MN, who is also the</div>
<div>
Ag committee chairman, will be coming to Brazil and Argentina soon</div>
<div>
on a fact finding mission to see how the trade war has affected and/or</div>
<div>
stimulated other countries at the expense of the American farmer. </div>
<div>
How is China helping AR and BR with infrastructure?</div>
<div>
I am happy to hear they are coming. I feel they are 20 years too late.</div>
<div>
Given some of the projections I have seen for Brazil's production</div>
<div>
by 2025 and 2050, we need not be producing soybeans north of I-94</div>
<div>
in the USA. </div>
<div>
<br /></div>
<div>
Climate change, resurgence in Chinese soy demand post ASF, FX</div>
<div>
distorting and incentivizing production, and railroad expansion will</div>
<div>
all play into Brazil's hand in the coming years. </div>
<div>
<br /></div>
<div>
I mentioned this to clients several years ago as China evolves</div>
<div>
in her food needs. I said, what if China can't get soybeans fast enough</div>
<div>
because of factor X? Maybe they decide to buy Brazil Foods, turbo-charge</div>
<div>
chicken and pork production within Brazil, keep the beans here, crush and</div>
<div>
make into feed here, and then just ship the end product to China?</div>
<div>
<br /></div>
<div>
If ASF would last a number of years? Is the above such a crazy idea?<br />
Of course this would be a boon for livestock producers around the world</div>
<div>
as China searches for protein in the mean time.</div>
<div>
<br /></div>
<div>
If something like that were to happen, think of how that changes Brazil's</div>
<div>
logistics needs? We flip from huge bulk grain volumes at ports to </div>
<div>
refrigerated warehouses storing meat in containers. We would need</div>
<div>
more soy crushers and more corn ethanol mills. DDG's would be in</div>
<div>
high demand. Huge increase in Brazil soy and corn storage capacity to</div>
<div>
hold grains year around for processing. Could that be Brazil's future</div>
<div>
by 2050? Damn right it could be, maybe even by 2030 if a renewed</div>
<div>
search for protein ensues. </div>
<div>
<br /></div>
<div>
Thank you for all the newsletter renewals and VIP retainers.</div>
<div>
I have been doing this for over 15 years now.</div>
<div>
I am not sure where the time has gone.<br />
My son is taking Brazil college exams and also the USA SAT is<br />
given 4X per year here in Goiania. Who wudda thunk? </div>
<div>
<br /></div>
<div>
The more Brazil trys to change- the more she stays the same</div>
<div>
i.e. Petrobras and fuel pricing drama.</div>
<div>
<br /></div>
<div>
For those outside South America, one needs to watch the ARG election</div>
<div>
in Oct. It will be important that Macri wins again. If ARG would go LEFT,</div>
<div>
combined with weak FX in Uraguay and Venezuela problems, that would</div>
<div>
be a stiff head wind for Brazil to tolerate going forward. It would lead to</div>
<div>
a weaker REAL. </div>
<div>
<br /></div>
<div>
Regards</div>
<div>
<br /></div>
<div>
Kory</div>
<div>
<br /></div>
<div>
Keywords: BR soy and corn, corn ethanol, trucker strike, FX, </div>
<div>
protein shift dynamic long term, USA Ag committee junket to BR and ARG, Trade war,<br />
ARG election Oct 2019</div>
<div>
<br /></div>
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<br /></div>
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Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com59tag:blogger.com,1999:blog-6180916914060633915.post-22150966385977887392019-03-03T03:38:00.000-08:002019-03-03T03:38:07.143-08:00March 3 blog update<b>Happy Carnival</b><br />
<br />
Brazil is in party mode for a few days.<br />
<br />
People seem to forget the dam collapse just a month or<br />
so ago. The situation was handled terribly.<br />
Many still unaccounted for.<br />
<br />
The rains have returned and thus the soybean crop<br />
has stabilized. I am at 114 mmt. Others are thinking<br />
115+ and yet others are down in 106-108 area.<br />
We need to keep in mind that the potential was 125<br />
back in December. Therefore, even a 115 number<br />
is 10 mmt off the highs. That is still 360 million<br />
bushel gone from the peak. The drought was significant<br />
in various regions. Historically, it has to be really bad<br />
to lose more than 15 mmt. Those that were thinking as<br />
low as 101 mmt in January were seaking headlines.<br />
I outlined all of this in newsletters and flash updates.<br />
<br />
Yields out of Argentina are fantastic. Rain makes<br />
grain. Look for soy and corn numbers to increase even<br />
more down there.<br />
<br />
There has been flooding in Mato Grosso and Para state.<br />
This means the early planted 2nd crop corn will be beyond<br />
fantastic this year. Early corn is ready to tassle. With rains<br />
of up to 8 inches in last two weeks, much of the crop<br />
is already in the bag.<br />
<br />
<b>Brazil 2nd crop corn</b><br />
<br />
65 mmt crop is already in the bag<br />
70 mmt is likely<br />
75 mmt is not outside the realm of possiblity<br />
80 mmt is being whispered about by some.<br />
<br />
80+ 25 = 105 total maybe ???<br />
<br />
Cotton area expanded by 33% so that has inhibited corn's<br />
ability to shoot the moon. Bottom line: there will be<br />
plenty of corn.<br />
<br />
With the excess rains, BR 163 has turned into a 70 km long<br />
truck stop. Some trucks have been sitting for 5 days.<br />
No food and all they have to drink is rain water.<br />
Tempers are flaring now.<br />
<br />
The military did pave 45 km last season of the last<br />
90 km to get to Mirituba. From Mirituba to Santarem,<br />
there are a few more KM that need to get covered.<br />
They stopped because of lack of material.<br />
<br />
Three weeks ago, the new Minister of Logistics went for<br />
a truck ride himself to see the conditions. The drought<br />
was still intact so he was still able to move.<br />
<br />
As the truckers say, come out here now, take another<br />
ride and sit with us out here for a week with no food.<br />
<br />
The Mayor of Novo Progresso is pleading with Mato Grosso<br />
grain shippers to stop sending trucks. There is no room.<br />
3000+ trucks are stopped.<br />
<br />
It is 70 reais a ton cheaper to send soy north compared to<br />
Santos via rail. Either way the grain buyers lose money.<br />
<br />
Demurrage going north or higher freight going south.<br />
<br />
Farmers are holding on to 2nd half of soybean crop.<br />
They want higher prices.<br />
<br />
Port premiums rallied last week and then backed off.<br />
End of trade war has grain buyers worried.<br />
Port premiums might need to go negative in order<br />
to compete with USA and China bids.<br />
<br />
I will be going to Mato Grosso March 25th for a week.<br />
The BR 163 Show Safra will be record large again.<br />
I am curious to see the pace of equipment sales<br />
given the crop came in a bit light and cost of<br />
production is on the way up.<br />
Dollar FX 3.75:1<br />
<br />
In early April, I will send out a special newsletter<br />
as per my trip. Drop me a note to subscribe.<br />
<br />
Thank you for all the kind notes in recent weeks.<br />
Much appreciated.<br />
<br />
Kory<br />
<br />
<b>Key words:</b> Mato Grosso soy, BR 163, trucks, rains,<br />
Show Safra 163, 2nd crop corn size<br />
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<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com6tag:blogger.com,1999:blog-6180916914060633915.post-80037305573636311862019-02-10T02:48:00.004-08:002019-02-10T03:00:33.502-08:00Feb 10th blog update <b><span style="font-family: "times" , "times new roman" , serif; font-size: large;">Back to trend line yields</span></b><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Harvest is zipping along in Brazil. The hot December </span></span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;">and January took its toll on some </span></span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">fields. The general </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">commentary from producers are that yields are </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">coming in 10% </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">less than last year's record productivity.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">The USDA is still too high as per Brazil 2019 production.</span></span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;">But they are a </span></span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">lagging indicator especially when the </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">government was not working for </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">a month.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">2018 was a late planting year but ideal weather made for a </span></span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;">record crop.</span></span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">2019 was ideal planting date but late season stress mixed with </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">an above </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">average amount of early season soybeans nipped </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">them in the 8th and 9th </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">innings. More than likely the 2nd </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">crop corn and cotton will make up for </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">the shortfall of the </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">first crop.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">Bottom line is that from the drought of three years ago, </span></span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;">the sudden rise </span></span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">in soybean production from 95 mmt to </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">122 mmt was the outlier not the </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">norm.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">The Brazil stock market has been trading at record highs. </span></span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;">The Dollar </span></span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">has been weaker in Brazil until this past week. </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">The dam break was not good </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">for Vale. President Bolsonaro </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">is back in the hospital for a follow up </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">procedure due to his </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">stabbing during the campaign. The fear is that this</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">will delay negotiations on the social security reform bill. </span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Brazil has </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">ambitious ideas to try and cut ONE TRILLION REAIS from budget </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">over the next 10 years. This will be a heavy lift.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
<span style="font-family: "times" , "times new roman" , serif;">The big news in the media this past week is the continued talk that</span></span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Brazil will overturn the limit on foreign land ownership that was</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">implemented under Lula to help Dilma back in August of 2010.</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">In March, it will have been 8.6 years since this policy shift.</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Cyclically, this is interesting as we might be on the cusp of another</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">policy shift. With the Dollar FX at 3.70:1, this does make Brazil assets</span><br />
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">seem cheap again to foreigners.</span><br />
<span style="font-size: large;"><span style="font-family: "times" , "times new roman" , serif;"><br /></span>
</span><br />
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times" , "times new roman" , serif; font-size: large; mso-ansi-language: EN-US;">The Bolsonaro position is that Americans are welcome.
Brazil is also </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">waving the need for tourist visa for Americans this summer. </span></div>
<div class="MsoNormal">
<span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-ansi-language: EN-US;"><span style="background: white; font-family: "times" , "times new roman" , serif; font-size: large;">From June 1 through September 18, tourists
from the US, Australia, </span></span><span style="background-color: white; font-family: "times" , "times new roman" , serif; font-size: large;">Canada and Japan will be able to enter </span><em style="font-family: times, "times new roman", serif; font-size: x-large;"><span style="font-style: normal; mso-bidi-font-weight: bold;">Brazil</span></em><span style="background-color: white; font-family: "times" , "times new roman" , serif; font-size: large;"> for
up to 90 days </span><i style="font-family: times, "times new roman", serif; font-size: x-large;">without </i><em style="font-family: times, "times new roman", serif; font-size: x-large;"><span style="font-style: normal; mso-bidi-font-weight: bold;">a visa</span></em><i style="font-family: times, "times new roman", serif; font-size: x-large;">.</i></div>
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<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Mato Grosso implemented an updated FETHAB witholding tax for soybeans,</span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">corn, cotton, and cattle on Feb 1. Farmers are not happy with quick application </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">of a new tax that actually seems like double taxation for many on the same hectare.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">There is also much banter in media that the "Grain Railroad" will be approved </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">in 2019. This the rail from Sinop to Mirituba, Para. The Minister of Logistics </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">took a ride in a soybean semi-truck on BR 163 to see the condition for himself.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">He promised that BR 163 paving will be completed in 2019. This is a huge </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">factor for 2020 grain movement to the north. </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">The FS energy corn ethanol mill at Lucas do Rio Verde has completed its </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">doubling of capacity. They should be at 400 million liters per year now or </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">the 100 million gallon size. Construction has started on the 2nd mill at </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">Sorriso. This will also be a big one.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Impasa mill at Sinop was approved for increased warehouse capacity at thier site.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">They are now building 3 - 200,000 ton warehouse to store corn. That is 24 million</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">bushel of onsite corn storage. Mato Grosso corn in the future will stay in the state </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">and be made into fuel and DDG's. It is truly a paradigm shift. </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Mato Grosso will likely produce 1.1 billion bushel of corn this season again. </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">The Ag shows have started with Show Rural in Parana this past week.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">I am eager to hear results.</span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">The Show Safra 163 in Lucas do Rio Verde is the last week of March. </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">It will be record large. I know CASE IH Brazil has sent a record large </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">order to Steiger Tractor in Fargo, ND for 2019 for their 4 wheel drive </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">articulated tractors. The modernization of the BR fleet continues. </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Producers are very happy with the new administration. However, the </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">late season drought and the application of new taxes has a catch 22 feel </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">about it. </span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "times" , "times new roman" , serif; font-size: large;">The vicissitudes for the Brazilian producer continue. It is an occupational hazard. </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">There are so many positives on the horizon, but there always seems to </span><span style="font-family: "times" , "times new roman" , serif; font-size: large;">be a counter force that keeps things in check. </span></div>
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<span style="font-family: "times" , "times new roman" , serif; font-size: large;">Keywords: BR soy crop, Grain Railroad, Fethab, Budget,Corn ethanol, Case IH</span></div>
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<span lang="EN-US" style="font-family: "times new roman" , "serif"; mso-ansi-language: EN-US;"><span style="background: white;"><i><br /></i></span></span></div>
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<br />Kory Melbyhttp://www.blogger.com/profile/17837512707290329612noreply@blogger.com5