I am headed to Mato Grosso Friday for 9 days.
I will be doing my own crop tour and updating clients
in my November newsletter due out Nov 17th time frame.
For those of you that have contacted me regarding a 2015
soybean harvest and corn planting tour, time is of the essence.
Harvest will be a bit later than normal this year.
The full push harvest will not get going until the end of January.
February will be complete chaos. Rains, harvest, drying, planting,
and lack of storage. Truck lines as far as you can see.
Carnival is Feb 13-17th. Arriving during this time can be
time consuming and costly. It is best to arrive well before or
after Carnival.
Early and late February will be the optimal times to get a real time
grasp of yields and planting potentials for 2nd crop corn.
Late planted corn combined with no rain in April 2015 would mean
a wipe out for the 2nd crop. There is no more "cushion" left for this
years crop cycle. Things must unfold normally from here on out to maintain
par.
What a difference a month makes. I told clients in September I would
remain conservative as to Brazil´s soybean crop potential. 93 million tons
has been my number.
Most everyone else was higher. Now with recent adjustments made by some,
I am now the optimistic one. For now I stand pat on my number until I see
differently.
With all the soybeans in the world, a 10 million ton drop does not really matter to
the markets. A 20 million ton drop would stop the decline and trade sideways
with an upward bias. It still would not be a bull market.
We are in a bear until events prove it otherwise.
Flash updates will be sent out to subscribers while I am on tour.
Drop me a note at agturbobrazil@yahoo.com for more info.
Kory
Wednesday, November 5, 2014
Saturday, November 1, 2014
Rain, bugs, rust, crop size
Nov 1
It is November and only 40% of the soybeans are planted in Mato Grosso vs
75% normally.
We have been getting some rains. But rains are light. In recent years, rains
tend to set in and last all day by this time of year. It is fine for now, but sure
is weird. If rains would be like this in early January when crop needs lots of
water per day, we have a problem.
Vegetative index year over year shows an expansion of the drought.
The soybean crop size of 95 to 98 mmt is now gone.
Those who forecast a mega crop will soon be dropping their numbers.
The range is now 89-94 mmt. I am in this camp.
The crop will be planted in the next two weeks.
Insects and caterpillars are already being sprayed for 20 days after
planting.
The key to the 2015 soybean and corn crops now hinge on the harvest
window from Feb 20th through March 15th. The weather at this time will
determine everything.
If a wet weather scenario would set in during February, very little 2nd crop
corn will be planted. If it is planted, it will be for cover crop purposes and
not for harvest.
Some have said a 40% drop in Mato Grosso 2nd crop corn is possible.
I am not there yet.
The likely scenario will be a 20% drop in planted area and if the rains
shut off in April, another 20% whack to the yield. It might feel like
a 40% drop in a perfect storm.
Asian rust is showing up on re-growth soybeans. This drives agronomists
batty to see this so early. We know we need to spray 3 times.
There will be pressure on these soybeans from a very early stage.
Keep in mind the longest day of the year is Dec. 21. That is only
50 days away. Soybean growers know what this can mean.
This is a whacky year. Some say the Amazon is malfunctioning??
Maybe needs a new pump?
The pioneers of Mato Grosso have not experienced this in their young
history of 20 to 30 years from Cerrado/Forest to farmland.
It would not surprise me if we are talking about flooding by February.
Roads and bridges washed out and moldy soybeans.
The rally in Chicago and the Dollar/Real have been a godsend for many.
1.25 CME + 1 dollar forex feels like US$ 2.25/bu rally in Oct for many.
This gets many guys back in the black if we can produce an average yield.
This also means more expensive fertilizer and chemicals for 2016.
It is a catch 22. What saves you in the short run castrates you in the
longer term.
Brazil raised her interest rates to 11.25% this week. Some say 12% is next.
Here is another paradox. Brazil needs to stimulate growth with budget
deficit spending and yet slam the brakes on inflation at the same time.
In 2009/2010 Brazil lucked out with the Ben Bernanke helicopter of dollars
looking for a home or aka carry trade. Brazil had free money coming in.
No more free money. What will they do????
I will keep subscribers in the loop as I travel in Mato Grosso next week.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
It is November and only 40% of the soybeans are planted in Mato Grosso vs
75% normally.
We have been getting some rains. But rains are light. In recent years, rains
tend to set in and last all day by this time of year. It is fine for now, but sure
is weird. If rains would be like this in early January when crop needs lots of
water per day, we have a problem.
Vegetative index year over year shows an expansion of the drought.
The soybean crop size of 95 to 98 mmt is now gone.
Those who forecast a mega crop will soon be dropping their numbers.
The range is now 89-94 mmt. I am in this camp.
The crop will be planted in the next two weeks.
Insects and caterpillars are already being sprayed for 20 days after
planting.
The key to the 2015 soybean and corn crops now hinge on the harvest
window from Feb 20th through March 15th. The weather at this time will
determine everything.
If a wet weather scenario would set in during February, very little 2nd crop
corn will be planted. If it is planted, it will be for cover crop purposes and
not for harvest.
Some have said a 40% drop in Mato Grosso 2nd crop corn is possible.
I am not there yet.
The likely scenario will be a 20% drop in planted area and if the rains
shut off in April, another 20% whack to the yield. It might feel like
a 40% drop in a perfect storm.
Asian rust is showing up on re-growth soybeans. This drives agronomists
batty to see this so early. We know we need to spray 3 times.
There will be pressure on these soybeans from a very early stage.
Keep in mind the longest day of the year is Dec. 21. That is only
50 days away. Soybean growers know what this can mean.
This is a whacky year. Some say the Amazon is malfunctioning??
Maybe needs a new pump?
The pioneers of Mato Grosso have not experienced this in their young
history of 20 to 30 years from Cerrado/Forest to farmland.
It would not surprise me if we are talking about flooding by February.
Roads and bridges washed out and moldy soybeans.
The rally in Chicago and the Dollar/Real have been a godsend for many.
1.25 CME + 1 dollar forex feels like US$ 2.25/bu rally in Oct for many.
This gets many guys back in the black if we can produce an average yield.
This also means more expensive fertilizer and chemicals for 2016.
It is a catch 22. What saves you in the short run castrates you in the
longer term.
Brazil raised her interest rates to 11.25% this week. Some say 12% is next.
Here is another paradox. Brazil needs to stimulate growth with budget
deficit spending and yet slam the brakes on inflation at the same time.
In 2009/2010 Brazil lucked out with the Ben Bernanke helicopter of dollars
looking for a home or aka carry trade. Brazil had free money coming in.
No more free money. What will they do????
I will keep subscribers in the loop as I travel in Mato Grosso next week.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
Monday, October 27, 2014
Moving forward
I must say that I had a good belly laugh when I saw this image today.
No much to say about election. I am speechless.
One person summed it up well last night. Brazil gets the government she deserves.
The Real will be weak which will help save the Brazilian soybean farmer in early 2015.
Planting progress will now kick into high gear. I hear about problems in Parana and Mato Grosso.
There are always some.
I will be in Mato Grosso in November.
As the Dollar/Real ratio widens, there will be opportunities for foreign
investors that are quick on their feet.
We have seen this before. We need to go through some convulsions but Brazil
will be Brazil. Protests, strikes, corruption, steal a little here and there, kick back to
a few friends and before you know it we will have a new railroad. It is all about
positioning and now we have the correct people in place to get that done. The previous
four years was prep for the next four years. It has taken me a long time to get that
into my Gringo skull. It was kinda thick, now, it is more pliable.
It is hard for a Northern Hemisphere person to grasp what goes on in the minds
of a Latin American country citizen. What one populous would impeach a President for, a
Latin American country may very well re-elect. One needs to live here to understand it.
And even then, it can stare you right in the face and you will miss it.
No much to say about election. I am speechless.
One person summed it up well last night. Brazil gets the government she deserves.
The Real will be weak which will help save the Brazilian soybean farmer in early 2015.
Planting progress will now kick into high gear. I hear about problems in Parana and Mato Grosso.
There are always some.
I will be in Mato Grosso in November.
As the Dollar/Real ratio widens, there will be opportunities for foreign
investors that are quick on their feet.
We have seen this before. We need to go through some convulsions but Brazil
will be Brazil. Protests, strikes, corruption, steal a little here and there, kick back to
a few friends and before you know it we will have a new railroad. It is all about
positioning and now we have the correct people in place to get that done. The previous
four years was prep for the next four years. It has taken me a long time to get that
into my Gringo skull. It was kinda thick, now, it is more pliable.
It is hard for a Northern Hemisphere person to grasp what goes on in the minds
of a Latin American country citizen. What one populous would impeach a President for, a
Latin American country may very well re-elect. One needs to live here to understand it.
And even then, it can stare you right in the face and you will miss it.
Friday, October 10, 2014
Hot and dry, 2nd round elections, and re-planting of soybeans on deck
What a week.
Brazil had its first round elections. The pro-business candidate Aecio Neves came from
a distant 3rd place to formidable 2nd place competitor.
It has the current power structure on high alert.
At this time, it is a 50/50 toss up who will win.
It reminds me of the George Bush II and Al Gore election.
A few votes will likely determine this one too.
The weather has gone bonkers here too. Normally the dry season
ends by now and we have daily rains.
It is normal for the Eastern states to remain dry a bit longer.
Planting soy in November as a single crop is the norm.
But Mato Grosso, what a shocker. Pop corn fart dry this week.
The forecast is for another 6 to 10 days dry then some rains.
Friends of mine have 3200 ha of soybeans planted of 14,000.
They have stopped planting waiting for more rains.
They are watching the development of recently planted soy.
They are worried that re-planting will be necessary.
Do it again !!!!!
Some say two more days dry, re-plant.
This is really screwing up the plans of producers that plan on
an early soy harvest in January and plant cotton and corn behind.
With the main soy areas being planted circa November in Mato Grosso,
it makes a 2nd crop almost impossible or at the very least very very high risk.
I have not seen this weather scenario manifest in the 13 years I have been
watching Mato Grosso. This one is different. We have seen dry spells,
but nothing quite like this one.
We are off to an erratic start. Too wet down South. Wheat scab hurting the
crops in Parana and RGDS. Too dry in North and way too hot.
Up to 120 deg F at times.
I will monitor the situation.
Subscribers and VIP clients are the first to know.
Brazil had its first round elections. The pro-business candidate Aecio Neves came from
a distant 3rd place to formidable 2nd place competitor.
It has the current power structure on high alert.
At this time, it is a 50/50 toss up who will win.
It reminds me of the George Bush II and Al Gore election.
A few votes will likely determine this one too.
The weather has gone bonkers here too. Normally the dry season
ends by now and we have daily rains.
It is normal for the Eastern states to remain dry a bit longer.
Planting soy in November as a single crop is the norm.
But Mato Grosso, what a shocker. Pop corn fart dry this week.
The forecast is for another 6 to 10 days dry then some rains.
Friends of mine have 3200 ha of soybeans planted of 14,000.
They have stopped planting waiting for more rains.
They are watching the development of recently planted soy.
They are worried that re-planting will be necessary.
Do it again !!!!!
Some say two more days dry, re-plant.
This is really screwing up the plans of producers that plan on
an early soy harvest in January and plant cotton and corn behind.
With the main soy areas being planted circa November in Mato Grosso,
it makes a 2nd crop almost impossible or at the very least very very high risk.
I have not seen this weather scenario manifest in the 13 years I have been
watching Mato Grosso. This one is different. We have seen dry spells,
but nothing quite like this one.
We are off to an erratic start. Too wet down South. Wheat scab hurting the
crops in Parana and RGDS. Too dry in North and way too hot.
Up to 120 deg F at times.
I will monitor the situation.
Subscribers and VIP clients are the first to know.
Saturday, October 4, 2014
Dollar, elections, weather
Sunday is the big day. Elections
The latest polls show President Dilma winning in a runoff on Oct 26th.
When I see the amount of contra Dilma propaganda on Facebook, on car bumper
stickers, and comments from friends, I wonder who is voting for her? No one
admits they will and yet she is the leader?
The lower classes and population centers must love her? Keep things the same.
It made me chuckle this week when she was asked about corruption again.
Her response, " I believe that there is corruption in all parts of the world".
I guess that makes it OK??? Normal operating procedure.
The dollar rallied to 2.52 Friday before selling off to 2.46 on the close.
The last three weeks a lot of volatility.
From my perspective 2.50:1 is about right. It is the max exchange rate
that investors and markets allow a country to have and yet remain viable.
We start talking 3:1, everyone knows you eat Bananas for breakfast.
Or at the very least, you are coo-coo for cocoa puffs.
Weather has been erratic. Heavy rains in Southern Brazil. Foz do Iguacu
is running at full force.
http://www.gazetadopovo.com.br/vidaecidadania/chuvas/conteudo.phtml?tl=1&id=1502896&tit=Vazao-das-Cataratas-alcanca-nivel-seis-vezes-maior-do-que-a-media
The Northeast is running behind. And the forecast that it is to remain below normal rainfall
for the next couple weeks. Coffee, Cane, and water reservoirs are of concern.
I will update clients Sunday night or Monday morning as per election results.
Conab will be out Thursday Oct 9th with their first 2015 crop size forecast.
I will send out special report.
Newsletter purchase link as at:
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
The latest polls show President Dilma winning in a runoff on Oct 26th.
When I see the amount of contra Dilma propaganda on Facebook, on car bumper
stickers, and comments from friends, I wonder who is voting for her? No one
admits they will and yet she is the leader?
The lower classes and population centers must love her? Keep things the same.
It made me chuckle this week when she was asked about corruption again.
Her response, " I believe that there is corruption in all parts of the world".
I guess that makes it OK??? Normal operating procedure.
The dollar rallied to 2.52 Friday before selling off to 2.46 on the close.
The last three weeks a lot of volatility.
From my perspective 2.50:1 is about right. It is the max exchange rate
that investors and markets allow a country to have and yet remain viable.
We start talking 3:1, everyone knows you eat Bananas for breakfast.
Or at the very least, you are coo-coo for cocoa puffs.
Weather has been erratic. Heavy rains in Southern Brazil. Foz do Iguacu
is running at full force.
http://www.gazetadopovo.com.br/vidaecidadania/chuvas/conteudo.phtml?tl=1&id=1502896&tit=Vazao-das-Cataratas-alcanca-nivel-seis-vezes-maior-do-que-a-media
The Northeast is running behind. And the forecast that it is to remain below normal rainfall
for the next couple weeks. Coffee, Cane, and water reservoirs are of concern.
I will update clients Sunday night or Monday morning as per election results.
Conab will be out Thursday Oct 9th with their first 2015 crop size forecast.
I will send out special report.
Newsletter purchase link as at:
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
Sunday, September 21, 2014
Election in two weeks
The dollar is trading 2:38:1- wow
President Dilma is campaigning on a platform "It could get worse, if you don´t vote for me!!"
The Twilight zone continues.
The election will be a defining moment for Brazil and specifically Brazil Ag.
If Dilma is re-elected, we will see a continuation of the status quo.
Stagflation: Inflation with no growth
If Marina is elected, this could be good for a few sectors.
But I cringe to think of the paralysis in the Amazon regions.
I fear nothing will happen as per projects.
Soybean planting has started. Nice rains in Parana.
Farmers are fearful of their futures.
Mato Grosso is going with throttle up.
To where, we don´t know today.
We have US$ 7.00/bu soy locally out there.
It might be a situation where we are cooking with gas and burning wood.
or in other words:
We are dumping a lot of resources in the ground the next 90 days
and we might burn a lot of wood to dry wet soybeans the world
says we now have too much of.
Lots of questions in the next 2 to 5 weeks.
I sense more questions that answers. For everyone.
Rich, poor, middle class, land buyers, investors, speculators.
Now what?
Of my 13 years here, Brazil is the most nebulous I have ever seen her.
This could be two fold, Brazil is much more complex than 13 years ago.
or:
I was blind and innocent 13 years ago, it all seemed so much simpler.
Ignorance is bliss?
I am less ignorant today?
I don´t know.
But sure am enjoying the show.
The one thing I do know with certainty, that if Brazil produces
95 mmt + of soybeans this year, they will wish on their tombstones that
they never did.
If only Brazil could have stand pat instead of expand.
God, I hope China is hungry. 72 mmt do I hear 75 mmt?
Going once, going twice, sold for ________________
Bidders number?
007
President Dilma is campaigning on a platform "It could get worse, if you don´t vote for me!!"
The Twilight zone continues.
The election will be a defining moment for Brazil and specifically Brazil Ag.
If Dilma is re-elected, we will see a continuation of the status quo.
Stagflation: Inflation with no growth
If Marina is elected, this could be good for a few sectors.
But I cringe to think of the paralysis in the Amazon regions.
I fear nothing will happen as per projects.
Soybean planting has started. Nice rains in Parana.
Farmers are fearful of their futures.
Mato Grosso is going with throttle up.
To where, we don´t know today.
We have US$ 7.00/bu soy locally out there.
It might be a situation where we are cooking with gas and burning wood.
or in other words:
We are dumping a lot of resources in the ground the next 90 days
and we might burn a lot of wood to dry wet soybeans the world
says we now have too much of.
Lots of questions in the next 2 to 5 weeks.
I sense more questions that answers. For everyone.
Rich, poor, middle class, land buyers, investors, speculators.
Now what?
Of my 13 years here, Brazil is the most nebulous I have ever seen her.
This could be two fold, Brazil is much more complex than 13 years ago.
or:
I was blind and innocent 13 years ago, it all seemed so much simpler.
Ignorance is bliss?
I am less ignorant today?
I don´t know.
But sure am enjoying the show.
The one thing I do know with certainty, that if Brazil produces
95 mmt + of soybeans this year, they will wish on their tombstones that
they never did.
If only Brazil could have stand pat instead of expand.
God, I hope China is hungry. 72 mmt do I hear 75 mmt?
Going once, going twice, sold for ________________
Bidders number?
007
Friday, September 12, 2014
Twilight zone
I feel like I am in the Twilight zone this week.
USDA confirmed mega crop
Conab replaced the 500,000 tons of soy they took away in August
(net result: same as July report)
Soybean prices break into new lows
Multiple crop size estimates out of Brazil ranging from
94-98 mmt tons of soybeans for 2015
The dollar rallies to 2.35:1 on the likelihood that Dilma will
be re-elected and finish running the country into the ground
(This acts like a snorkel to help Brazilian farmer keep his head above water)
Soybean prices in Sorriso, MT are quoted at US$ 7.18/bushel.
(Satellite elevator receiving stations will likely have a 6 handle on price)
Brazil will increase Bio-diesel ratio to 7%
Brazil will increase ethanol blend to 27.5%
Conab held its 3rd corn auction this week and corn is hauling ass to
port to fill commitments before USA crop comes online
Argentina is holding boatloads of old crop soy in silo bags
Brazil farmer is 11% sold new crop soy
What is wrong with this picture? See previous blog post:
Everyone is hell bent to plant soybeans and lose money.
It´s like the Brazilian soybean farmer has been watching the Addam´s
family.
The more money Gomez loses trading and growing soybeans
the hornier Morticia gets ???
2015 does not make sense under current dynamics.
I think everyone except maybe FC stone/Celeres is too optimistic this year.
It is a catch 22 scenario:
Farmers cut back on inputs and productivity goes down.
Low 90 mmt ton crop- prices stabilize
Farmers shoot the moon(good weather) and we produce 98mmt.
Soybeans drop to 7 dollars in Chicago.
Blood in the streets everywhere...........
Either scenario is not optimum.
Conservative numbers will be my mantra in coming months
USDA confirmed mega crop
Conab replaced the 500,000 tons of soy they took away in August
(net result: same as July report)
Soybean prices break into new lows
Multiple crop size estimates out of Brazil ranging from
94-98 mmt tons of soybeans for 2015
The dollar rallies to 2.35:1 on the likelihood that Dilma will
be re-elected and finish running the country into the ground
(This acts like a snorkel to help Brazilian farmer keep his head above water)
Soybean prices in Sorriso, MT are quoted at US$ 7.18/bushel.
(Satellite elevator receiving stations will likely have a 6 handle on price)
Brazil will increase Bio-diesel ratio to 7%
Brazil will increase ethanol blend to 27.5%
Conab held its 3rd corn auction this week and corn is hauling ass to
port to fill commitments before USA crop comes online
Argentina is holding boatloads of old crop soy in silo bags
Brazil farmer is 11% sold new crop soy
What is wrong with this picture? See previous blog post:
Everyone is hell bent to plant soybeans and lose money.
It´s like the Brazilian soybean farmer has been watching the Addam´s
family.
The more money Gomez loses trading and growing soybeans
the hornier Morticia gets ???
2015 does not make sense under current dynamics.
I think everyone except maybe FC stone/Celeres is too optimistic this year.
It is a catch 22 scenario:
Farmers cut back on inputs and productivity goes down.
Low 90 mmt ton crop- prices stabilize
Farmers shoot the moon(good weather) and we produce 98mmt.
Soybeans drop to 7 dollars in Chicago.
Blood in the streets everywhere...........
Either scenario is not optimum.
Conservative numbers will be my mantra in coming months
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