May 16th
It was an "other worldy" week for me. Events unfolded personally and in the media that had no connection to normalcy or reality of the current conditions.
The pernsonal stuff is best left for a soap opera writer to deal with.
The common underlying theme with Brazil is that is operates on pure, raw emotion.
If you cannot deal with drama, Brazil is not for you.
I did blow a gasket this week as events unfolded. It had been a while since the last
head gasket sprung a leak. It felt good to vent. It cost me 2 packs of cigarettes to
say I am sorry to my security guard. He received much Viking rage. He was just the
messenger and not the cause of the problems.
Family, booze, cat fights, dealing with hospitals and energy company mistakes all
came together and twisted my shear pin. Period....
To dovetail with the above "trip", I have read two different articles this week talking
about China and railroad investment???? Huh???
The East/West railroad was approved and announced back in March 2010. Not one
spadeful of dirt has been moved.
The government has announced that all infrastructure projects will be put on hold
during this period of fical austerity.
In the media, licensing of the North/South railroad through Mato Grosso/Para has been
announced. Great, let the licensing begin !!!!!!!! Keep he shovels in the garage!!!!
Next up was the 50 billion dollar announcement that China will be investing in a transcontinental
railroad across South America. The countries included are Peru, Bolivia and Brazil.
I am not sure why all of these pie in the sky projects are being talked about now.
One would think an election is coming up soon. This is not the case.
It is like taking a pain killer to avoid the current reality. Let us talk about this over there,
while cuts, zero growth, and lay offs are occuring over here.
The articles make no sense at the current time.
These projects might become reality one day, but that is years from now,
not 2015.
In 2015, we need to find the money to fill the holes in the road. At the moment,
contractors with Dept of Transport are 90 days past due on their invoices
and they are shutting all projects down !!!!!!!!!!!!!
Saturday, May 16, 2015
Friday, May 1, 2015
May 1 update
April rains have gone a long way to making the 2nd crop corn. The 2nd crop is going to
be much better than I originally thought. The center-west part of Brazil has received
late season rains four years in a row. Given the late planting, this is very fortunate.
Conab will be out with another report May 12th, let us see what they do with the
corn and soybean numbers. I am thinking a small down tick in soybean number
and increase in corn number.
Funding for Brazil infrastructure projects are on hold. This is frustrating to those
waiting for years for roads and railroads to be completed.
This past week was the big Agri-show in Ribeirao Preto, SP. Equipment manufacturers
have had a difficult 1st quarter of 2015. Sales have been slow.
Most expect the 2nd half to better.
I think this will depend on how corn and soybean prices continue downward or
stablize in this area.
If corn is trading low 3 dollars and soybeans break into the 8´s, then I think 2nd
half of 2015 will be equally as weak as the 1st half.
Fertilizer sales have been a good leading indicator for the coming year´s soybean
expansion rate. Last year fertilizer grew by 5% and area grew by 5%.
As of the first quarter of 2015, the fertilizer sales rate is 5% below that of last year.
Many blame the lack of agricultural credit for this. The new plan is said to be announced
by May 19th.
I think with the strong dollar weak real relationship; soybeans remain the only game in
town as per planting for 2016.
I do not think we will see a decline in planted area in Brazil for soybeans, but I think the
era of 5%+ per year expansion has run its course. I think we platueau in this area of
31.5 million hectares and see where soybeans bottom out assuming a 4 billion bushel
USA crop for 2015.
I will update as I know more via my newsletter and VIP flash updates.
Drop me a note if interested.
agturbobrazil@yahoo.com
Kory
be much better than I originally thought. The center-west part of Brazil has received
late season rains four years in a row. Given the late planting, this is very fortunate.
Conab will be out with another report May 12th, let us see what they do with the
corn and soybean numbers. I am thinking a small down tick in soybean number
and increase in corn number.
Funding for Brazil infrastructure projects are on hold. This is frustrating to those
waiting for years for roads and railroads to be completed.
This past week was the big Agri-show in Ribeirao Preto, SP. Equipment manufacturers
have had a difficult 1st quarter of 2015. Sales have been slow.
Most expect the 2nd half to better.
I think this will depend on how corn and soybean prices continue downward or
stablize in this area.
If corn is trading low 3 dollars and soybeans break into the 8´s, then I think 2nd
half of 2015 will be equally as weak as the 1st half.
Fertilizer sales have been a good leading indicator for the coming year´s soybean
expansion rate. Last year fertilizer grew by 5% and area grew by 5%.
As of the first quarter of 2015, the fertilizer sales rate is 5% below that of last year.
Many blame the lack of agricultural credit for this. The new plan is said to be announced
by May 19th.
I think with the strong dollar weak real relationship; soybeans remain the only game in
town as per planting for 2016.
I do not think we will see a decline in planted area in Brazil for soybeans, but I think the
era of 5%+ per year expansion has run its course. I think we platueau in this area of
31.5 million hectares and see where soybeans bottom out assuming a 4 billion bushel
USA crop for 2015.
I will update as I know more via my newsletter and VIP flash updates.
Drop me a note if interested.
agturbobrazil@yahoo.com
Kory
Wednesday, April 22, 2015
Nice rains, dollar stable at 3:1, protests have fizzled
April 22
Brazil runs on emotion. It is the fuel of daily life. The politicians know this and prey on it during
elections and play to it during protests. It seems like the climate, the beer, and the girls all get mixed
together and prevent the public from staying pissed off for long periods of time.
It seems like it is easier to stay angry when the climate is cold, the beer is frozen and the
bars are full of guys. The testosterone provokes action and leads to some sort of change
of the status quo.
In Brazil, blue ball syndrom is less of an issue than in Northern hemisphere. Aggressive behavior
wanes in Latin America and, in the end, the issue passes and we worry about something else.
The above is an oversimplification of the cultures, but from a psychodynamic perspective, this
is not too far from the truth.
For the time being the impeach Dilma movement has fizzled.
For the time being, the truckers strikes have fizzled.
Nice rains the past four weeks will increase 2nd crop corn potentials.
Mato Grosso, MGDS and Goias have been very fortunate of late.
The big Agri-show is next week in Brazil. I will be watching for sales results.
I will also be working on May newsletter.
Brazil runs on emotion. It is the fuel of daily life. The politicians know this and prey on it during
elections and play to it during protests. It seems like the climate, the beer, and the girls all get mixed
together and prevent the public from staying pissed off for long periods of time.
It seems like it is easier to stay angry when the climate is cold, the beer is frozen and the
bars are full of guys. The testosterone provokes action and leads to some sort of change
of the status quo.
In Brazil, blue ball syndrom is less of an issue than in Northern hemisphere. Aggressive behavior
wanes in Latin America and, in the end, the issue passes and we worry about something else.
The above is an oversimplification of the cultures, but from a psychodynamic perspective, this
is not too far from the truth.
For the time being the impeach Dilma movement has fizzled.
For the time being, the truckers strikes have fizzled.
Nice rains the past four weeks will increase 2nd crop corn potentials.
Mato Grosso, MGDS and Goias have been very fortunate of late.
The big Agri-show is next week in Brazil. I will be watching for sales results.
I will also be working on May newsletter.
Tuesday, April 7, 2015
Soybean expansion continues - Dollar trumps CBOT
I am standing in 2nd year soybean field from pasture in NW Goias state.
This, historically, is pasture region in Brazil.
Rumor has it that one land owner on Mato Grosso side of river will prep 12,000 acres of pasture for soybeans in the coming months to be ready for November planting.
They let 16 and 18 dollar soybeans slide.
But dollar 3:1, let us plant soy !!!!
In the battle between soybean farmers and cowboys, the soybean farmers seem to be winning round ONE.
Saturday, March 7, 2015
Contrary to popular opinion, I am optimistic on Brazil
March 7
For two to three years now I have been writing blogs and newsletters about what could go wrong
with Brazil. All I saw were problems. I was not sure what the catalyst would be for a correction
in the Brazilian economy. I knew that dollar at less than 2:1 and the otherwise irrational exuberance
was the illusion and not the norm. I never dreamed that Brasil´s golden calf company, Petrobras,
would be the domino that started a chain reaction throughout the country exposing so much
corruption, incompetence, and lack of planning in multiple sectors at once - energy,
manufacturing, water, hydro-electric,banking, and ag infrastructure/roads-trucking.
The dollar is now 3.05:1. My old friend has returned. After the trillions the USA has spent trying to
stimulate its economy, I never thought I would see 3:1 again. I lived through dollar 1.55:1 twice.
I was the poor gringo surviving while the Brasilians went on global spending sprees. It was other
worldly to live through. My maid drove a nicer car than I had. I thought maybe I should be working
for her.
That illusion has come to and end. 3:1 is more normal for Brazil historically. Some say we are headed
to 3.5:1. I do not know. If we do trade there, it will be for a short period of time.
I am becoming more and more optimistic on Brazil. I know human nature is to tend to run the
opposite direction when there is crisis. I tend to be more like Warren Buffet and am attracted to the
things out of favor and be cautious when the herd is running in the same direction.
Back in 2004, Brasil ag land reached a hysteria phase with regards to demand and prices. The dollar
had been 3:1. There was much expansion and easy- high interest credit to fuel the fire.
In recent years, Brazil land has gotten expensive relative to returns. The cost of production is over
twice as much as back in 2004. Therefore, I have been hesitant to predict a new wave of expansion in
Brazil soybean area. Current prices are a godsend to those interior farmers who planted a soybean
crop in September/November looking at guaranteed losses. They are now seeing profits. But, they
must be careful as they plan ahead to 2016.
3:1 dollar makes Brazil land look mildly attractive again. The caveat to this is that wealthy people
tend to invest in fixed assets during these inflationary times. That tends to prop up prices and it
feeds on itself.
Overall, I am becoming more optimistic on Brazil. It is not that I know of some magic event around
the corner that will fix everything, but more so where we are at in the cycle. We are closer to a
bottom than a top. Brazil will likely go through some social and economic convulsions in the coming
months, but that will likely mark a capitulation in current events and then things will start to get better.
For those looking at Brazil, now is the time to be doing your due diligence. Do not wait for the
Economist or Wall Street Journal to tell you how great Brazil is. By then, we will be well on our
way again.
I will be in Mato Grosso the end of March on a crop tour and research mission.
April newsletter will have details of my trip.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
http://www.brazilintl.com/states/matogrosso/korymelby/kory-cs/km-cs.htm
Kory
For two to three years now I have been writing blogs and newsletters about what could go wrong
with Brazil. All I saw were problems. I was not sure what the catalyst would be for a correction
in the Brazilian economy. I knew that dollar at less than 2:1 and the otherwise irrational exuberance
was the illusion and not the norm. I never dreamed that Brasil´s golden calf company, Petrobras,
would be the domino that started a chain reaction throughout the country exposing so much
corruption, incompetence, and lack of planning in multiple sectors at once - energy,
manufacturing, water, hydro-electric,banking, and ag infrastructure/roads-trucking.
The dollar is now 3.05:1. My old friend has returned. After the trillions the USA has spent trying to
stimulate its economy, I never thought I would see 3:1 again. I lived through dollar 1.55:1 twice.
I was the poor gringo surviving while the Brasilians went on global spending sprees. It was other
worldly to live through. My maid drove a nicer car than I had. I thought maybe I should be working
for her.
That illusion has come to and end. 3:1 is more normal for Brazil historically. Some say we are headed
to 3.5:1. I do not know. If we do trade there, it will be for a short period of time.
I am becoming more and more optimistic on Brazil. I know human nature is to tend to run the
opposite direction when there is crisis. I tend to be more like Warren Buffet and am attracted to the
things out of favor and be cautious when the herd is running in the same direction.
Back in 2004, Brasil ag land reached a hysteria phase with regards to demand and prices. The dollar
had been 3:1. There was much expansion and easy- high interest credit to fuel the fire.
In recent years, Brazil land has gotten expensive relative to returns. The cost of production is over
twice as much as back in 2004. Therefore, I have been hesitant to predict a new wave of expansion in
Brazil soybean area. Current prices are a godsend to those interior farmers who planted a soybean
crop in September/November looking at guaranteed losses. They are now seeing profits. But, they
must be careful as they plan ahead to 2016.
3:1 dollar makes Brazil land look mildly attractive again. The caveat to this is that wealthy people
tend to invest in fixed assets during these inflationary times. That tends to prop up prices and it
feeds on itself.
Overall, I am becoming more optimistic on Brazil. It is not that I know of some magic event around
the corner that will fix everything, but more so where we are at in the cycle. We are closer to a
bottom than a top. Brazil will likely go through some social and economic convulsions in the coming
months, but that will likely mark a capitulation in current events and then things will start to get better.
For those looking at Brazil, now is the time to be doing your due diligence. Do not wait for the
Economist or Wall Street Journal to tell you how great Brazil is. By then, we will be well on our
way again.
I will be in Mato Grosso the end of March on a crop tour and research mission.
April newsletter will have details of my trip.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
http://www.brazilintl.com/states/matogrosso/korymelby/kory-cs/km-cs.htm
Kory
Saturday, February 21, 2015
Wet week
Feb 21
Harvest was slow this past week in Mato Grosso. In some areas it rained
everyday. This is normal to have a two week wet spell this time of year.
It puts the 2nd crop corn planting at greater risk. One month delay in October
combined with another two weeks in February puts most of the crop to
be planted after the ideal planting window. Production potential is at risk.
Mato Grosso has a nice carryover of last year´s corn crop on hand yet.
The percent of 2nd crop planted as of March 1 will be important stat.
It will likely be the slowest planting pace ever.
With big toys and BT genetics, they can catch up quick.
The next Conab report will be out March 10th. I expect to see
cuts in Bahia soy crop as well as added cuts in Goias, Minas Gerais,
and Sao Paulo.
Spot soybean bids have been firm in Mato Grosso recently with weaker REAL
and demand for spot soy. Once the sun shines again, these bids will drop like a
rock.
Prices are better for soybeans than what I was thinking back in October.
Farmers will have a chance to sell some on a spot basis and then hold the rest
as an inflation hedge for later. They will make some money this year but the weak
Real means higher cost of production for 2016. This means growing pains ahead.
I doubt we will see any expansion in soy area for 2016.
The 2015 surge likely blew the top off the the recent Brazil soybean surge of
6 million + hectares in four years. Time to take a breather.
Argentina looking good, but they will likely sell their soybeans on their estate sale
and not in the immediate future. New government in early 2016 will force them
to hope for a better future and bet on the Come line. Come 7/11??? or Argentine
Craps? stay tuned..........
Harvest was slow this past week in Mato Grosso. In some areas it rained
everyday. This is normal to have a two week wet spell this time of year.
It puts the 2nd crop corn planting at greater risk. One month delay in October
combined with another two weeks in February puts most of the crop to
be planted after the ideal planting window. Production potential is at risk.
Mato Grosso has a nice carryover of last year´s corn crop on hand yet.
The percent of 2nd crop planted as of March 1 will be important stat.
It will likely be the slowest planting pace ever.
With big toys and BT genetics, they can catch up quick.
The next Conab report will be out March 10th. I expect to see
cuts in Bahia soy crop as well as added cuts in Goias, Minas Gerais,
and Sao Paulo.
Spot soybean bids have been firm in Mato Grosso recently with weaker REAL
and demand for spot soy. Once the sun shines again, these bids will drop like a
rock.
Prices are better for soybeans than what I was thinking back in October.
Farmers will have a chance to sell some on a spot basis and then hold the rest
as an inflation hedge for later. They will make some money this year but the weak
Real means higher cost of production for 2016. This means growing pains ahead.
I doubt we will see any expansion in soy area for 2016.
The 2015 surge likely blew the top off the the recent Brazil soybean surge of
6 million + hectares in four years. Time to take a breather.
Argentina looking good, but they will likely sell their soybeans on their estate sale
and not in the immediate future. New government in early 2016 will force them
to hope for a better future and bet on the Come line. Come 7/11??? or Argentine
Craps? stay tuned..........
Sunday, February 8, 2015
Nice rains, Conab, soy crop gets smaller
The soy crop is getting smaller. The truth is finally coming out.
Rains have returned to the Cerrado. In many cases it will be too late.
Yields have been nipped. Harvest is at full speed now in Mato Grosso.
I think that crop is also a bit smaller than some think.
IMEA will be out Monday with new numbers.
Conab on Thursday. I will send out special report to subscribers.
I have VIP consult on Tuesday.
Carnival starts this Friday for many. Brazil will be on cloud 9 from
Feb 13-noon Feb 18th. Whatever mode........
Car and ag machinery sales are off to a very slow start in January.
Slowest since the global crisis of 2009.
Corn crop is going in fast behind the combines.
Will better prices entice farmers to plant a bit more than expected?
Stay tuned.
Optimum planting window closes Feb 26th for many locals.
Water and energy will be the major buzz stories for Brazil in 2015.
Crisis of Biblical proportions for many.
Rains have returned to the Cerrado. In many cases it will be too late.
Yields have been nipped. Harvest is at full speed now in Mato Grosso.
I think that crop is also a bit smaller than some think.
IMEA will be out Monday with new numbers.
Conab on Thursday. I will send out special report to subscribers.
I have VIP consult on Tuesday.
Carnival starts this Friday for many. Brazil will be on cloud 9 from
Feb 13-noon Feb 18th. Whatever mode........
Car and ag machinery sales are off to a very slow start in January.
Slowest since the global crisis of 2009.
Corn crop is going in fast behind the combines.
Will better prices entice farmers to plant a bit more than expected?
Stay tuned.
Optimum planting window closes Feb 26th for many locals.
Water and energy will be the major buzz stories for Brazil in 2015.
Crisis of Biblical proportions for many.
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