Wednesday, May 29, 2013

Holiday, pigs, China, corn, dollar, GDP

Wow, for a short week, a lot has happened

Thursday is a holiday in Brazil. Many are taking a four day weekend.

I was not expecting much to be happening this week.

* IMEA came out with a 17.3 mmt corn crop for Mato Grosso.
This is up from 7 mmt just two years ago. I have been watching
this for 13 years now. I am even shock and awed by this rate
of growth.

* Smithfield foods is selling to Chinese company. Wow- talk
about vertical integration. If you don´t have enough of something,
just buy the country? China would love to do the same thing in
Brazil, just buy the soybean farm they need- solve the problem.
Maybe the Smithfield purchase is a hint for Brazil going forward.
If logistics keep being delayed, maybe China should just buy
Brazil Foods? Skip all this nonsense with buying soybeans direct
and trying to get them to port and shipped in a timely manner.
Buy the animal protein end product. Quit all this dicking around.
If Brazil wants to throttle back land holding sizes and not
build railroads, China will buy all the pork bellies via the
Bovespa. Problem solved. This is a bit premature to be talking
about, but something to ponder given recent trend. Some states(USA)
are worried about corporate farms. How about when a country
buys the whole industry?  what then? At least China is putting
their trade surplus to good use and giving some of our IOU´s back.

* Brazil´s GDP has been revised down to 2.2% annualized.
This is pathetic given the stimulus they have injected into
economy the past year. Inflation is a worry. Interest rates
need to increase in Brazil. It is a paradox now on what to
do. The USA economy is showing signs of additional
growth. The 10 year note yield made a new high today for the year.
The dollar rallied to 2:11:1 today verses the Real.
Times are a changing- pay attention.

*Brazilian farmers have had a great two weeks. Soybeans
have rallied circa 2 dollars per bushel and the dollar is
increasing at same time. The perfect storm to sell a lot
of soybeans quickly.

*Personally I think we are at a cycle high in soybeans.
Brazil farmers should be aggressive sellers of old crop
and 2014 crop. Get it priced.

I will be headed out to Mato Grosso sometime in the
next two weeks. I will send out a newsletter thereafter
to subscribers.

Sunday, May 26, 2013

Corn logistics

Government and private sector are investing together to solve problems of corn chain

Funds will be allocated for the construction of warehouses and an annuity to farmers, who are hampered by the high cost of logistics in the country
Daniela Castro | Brasília (DF)

Large supply of the product will cause a reduction in the price paid by the market

The high cost of logistics remains as one of the worst obstacles to the competitiveness of the supply chain of corn in the country. Of every three bushels of corn that are aimed at Brazilian ports, two are on the way to pay the freight , since it is necessary to overcome long distances to the regions that produces to consumer.

To change the picture, the industry must develop a plan of action that will receive investments of
R$ 1.2 billion from the federal government and the private sector. The measure has been requested by  President Dilma Rousseff. The idea is to invest in the construction of warehouses and have an insurance policy that guarantees the producer income.

Harvesting of the second corn crop begins in the coming days. The prediction is that there is a surplus of 22 million tons compared to the consumption needs of the country. The harvest of grain in the United States , which will begin to be harvested in September should also have export surpluses.

The large supply of the product will cause the reduction of which is paid by the market value that is already under R$ 13.00 for a 60 kilo bag - guaranteed minimum price stipulated by the government.  - Last year, we have  R$ 15.20 per bag depending on the region in Mato Grosso. This year, we are working with R$ 11.12 per bag.

This means that we already broke the barrier of the minimum price and the government will have to intervene to ensure that is provided by law - highlights the executive director of Aprosoja Brazil, Fabricio Moraes Rosa.  

 - The price to carry a sack of corn from Mato Grosso the Rio Grande do Sul is already higher than the actual value of the product. Is costing around R $ 15.00 in freight cost for a bag of corn MT to RS, while corn is costing R$ 12.00. So, it is absurd.

 Where the price of shipping is higher than the price of the product itself? - Asks the executive director of the Brazilian Association of Swine Breeders (ABCS), Fabiano Coser. while in the United States, shipping a ton of farm to the port is US$ 12.00, here the value is ten times higher because corn is put on a truck, which reaches 1100 km run to reach the port.  - Every three sacks you move this production to export, you leave two bags just to cover the shipping. It is really a very serious problem - adds Rose.

Saturday, May 25, 2013

Sugar ship line up at ports increases

Row of ships in ports for shipment of sugar increases from 32 to 43

The total number of ships waiting to embark sugar at Brazilian ports rose from 32 to 43 for the week ended May 22, according to a survey done by the shipping agency Williams Brazil

The report considers vessels already anchored and those who are waiting for berthing and also those that will arrive by the 14th of June. 1.35 million tons of sugar are scheduled to load. The largest amount will be loaded at the Port of Santos, whence will come out 1.01 million tons, or 75% of the total. Paranaguá liable for the remaining 25%, or 335,000 tons. In Santos, the terminal will embark 474,100 tonnes for Cosan during the period. At the end of line Copersucar, shipments should total 326,800 tons, while for Cargill, 42,000 tons, and Noble, 173 600 tons. Much of the volume to be exported is the variety VHP - sugar Raw high polarization - with 1.29 million tons. VHP is shipped in bulk. There are no records for shipments of sugar type A-45 in the period. Already refined sugar crystal B-150 totaling 52,700 tons. Crystal sugar and A45 are shipped bagged.

Friday, May 24, 2013

Chinese can not invest in Mato Grosso because of bureaucracy

Chinese can not invest in MT because of bureaucracy

Investors come to the country, but are barred by rules difficult to be fulfilled and complex environmental legislation

Source: Ascom Aprosoja

The deficit is a logistical issue discussed in all regions covered by the entourage of the 8th tour by Aprosoja. On Thursday (23), the event was in Agua Boa, eastern region of Mato Grosso, the municipality which is between those who have a greater capacity for agricultural expansion through conversion of pastureland to cropland. There are at least 431,000 hectares that can be used for agriculture, according to the Mato Grosso Institute of Agricultural (IMEA).

But that which hinders this expansion is the lack of alternatives to ship out of the region the soybeans. Producers questioned during the tour the executive Lin Tan on why the Chinese do not invest in infrastructure in Mato Grosso since the state is the main customer of China with 70% of soybeans produced being sent to the country. "It is very difficult to invest in Brazil. We want to invest, but here there are many rules and regulations, actually more bureaucratic than China's, "said Lin.

For producer and delegate Aprosoja the municipality, Junior Garruti, the big problem in Brazil is that governments do not fulfill their duty. "The government does not decide what is priority. Failure is a cultural problem, our government does not have a voice. Many ministries are created and ends up messing up the other one and sends another stop working, "said Garruti.

Lin Tan also explained that many Chinese businessmen come to Mato Grosso with the intention of investing in silos, railways and ports, but the first difficulty is to find the right people to deal with these investments. "The Chinese are convinced that the government is taking care of these investments here because in China the government controls everything. And when they get here there are people in government. We understand that there are business opportunities here, but if we do not find the right person to make this happen, there is no business, "he clarified.

But when that first step is overcome, the second is the investors and the beneficiaries meet. The Chinese need to make sure that the project is a good investment and have some form of collateral. According to Lin Tan, then they find another big problem, environmental legislation. "Environmental regulations in Brazil and Mato Grosso are much stricter than in China. Here's indigenous reserve and several other licenses are required, there is a lot of bureaucracy, "he explained.

According to producer José Luiz Polizeli, one of the issues that attracted the most attention in his talk was the control that the Chinese government has on the country. "I never imagined that the Chinese government could be even more bureaucratic than ours, the feeling of having control over everything," he said. It's the first time he participates in the tour and the experience was odd. "I really enjoyed the lectures and they had a very good approach which forced us to imagine some situations and think about the future of the market. It's very different to have a representative here exposing the reality of each country. One thing is to read about it, but the other is able to take your questions there personally, "he added.

The tour is a realization of Aprosoja
 Aprosoja and the National Rural Education (Sennar-MT), sponsored by BASF, Bayer and Syngenta.


Thursday, May 23, 2013

Conab corn buying program

US$ 3.35/bushel for Mato Grosso




THE MINISTERS OF AGRICULTURE, FISHERIES AND FOOD SUPPLY AND FARM, using the powers conferred on them by art. 3-A of Law No. 8427 of May 27, 1992, in view of the resolution of the National Monetary Council in 3711, of April 16, 2009, the shelter provided by the Policy of Guaranteed Minimum Price - PGPM, dealt Decree-Law No. 79 of December 19, 1966, and the provisions of Case 21000.000656/2013-25, resolve:

Article 1 There are established the following parameters for the release of Put Option Agreement audience (COV) for corn grain crop in 2012/2013 and 2013 through public auctions to be conducted by the National Supply Company-Conab:

I - participants: farmers, directly or through their cooperatives;
II - contract expiration: November 29, 2013;

III - exercise prices:
a) for the States of the South, Southeast and Midwest (except MT): R $ 19.74 / 60kg;
b) for the states of Mato Grosso and Rondônia: R $ 15.12 / 60kg;
IV - Unit of measure of the contract: 27 (twenty seven) tons;

V - bringing the exercise of the contract: it is admitted by decision of the Ministry of Agriculture, Livestock and Supply (MAPA), the anticipation of the exercise of the contract, deducting for each month in advance
R $ 0.46 / 60kg for States relating to paragraph "a" of section III and R $ 0.42 / 60kg for the United referring to item "b" of section III;

VI - winning COV: may be from the month of August, complying with the criteria set out in section V;
VII - volume features: up to R $ 580,000,000.00 (five hundred and eighty million dollars), the limited budget of the Official Credit Operations - OOC, under Public Training Inventories;

VIII - the date of the auction, participants must have registration in good standing in the Unified Registration System Providers (SICAF) and, on the date of exercise of the option, be in good standing with the Informative Credit Unpaid Federal Public Sector (CADIN);
IX - MAPA may establish limit purchasing contract by auction, for each farmer, directly or through their cooperatives.

Article 2 The operations of VOC shall additionally comply with the conditions laid down by the National Monetary Council Resolution No. 3711 of April 16, 2009.

Article 3 This Ministerial Ordinance shall enter into force on the date of its publication.
Minister of Agriculture, Livestock and Food Supply
Minister of Finance
D.O.U., 23/05/2013 - Section 1

Wednesday, May 22, 2013

Brazil gov´t buying 2 million tons of Mato Grosso corn


The logistics issue is crucial in Mato Grosso and it is time to decide for the producer to expect the government's actions to remove corn from the market - which should support the price - or negotiates part of the second season now and reduces the need for storage.

According to the Mato Grosso Institute of Agricultural Economics (IMEA), the silo bags have been an alternative for farmers who want to wait for a reaction in prices, but the output is still "emergency".
"Considering the value of the silo bag without machinery, the cost per bag of corn with such alternative is around R $ 0.40 to R $ 0.50," said the IMEA in informative.

Those who can not afford this have traded production at a value below the operating cost.

"For those who expect high productivity, the market share of production now reduces the problem of lack of storage," says the institute.

Mato Grosso began selling corn harvest 2012/13 to R $ 15.96 / bag (quotation november/12), but only 6% of the production was closed this value. In January prices fell to R$ 14.01 on average. In May, with 4.5% of businesses closed, the average was 28% lower than in November, around R $ 11.53 / bag. The government indicated it will pay for corn Mato Grosso R$ 15.12 / bag, value, according to the IMEA covers the costs of production. But the volume of 2 million tons in option contracts is considered low. "Supports only 12.5% ​​of the entire crop," he says.

Today, the marketing of Mato Grosso corn reaches 26.7% of the total production for the season 12/13, equivalent to 4.3 million tons of the16.05 million tons expected for the current cycle. The expectation by IMEA and market agents is that businesses follow retracted to a marked improvement in prices by sellers. In the state, prices range from R $ 10.90 / bag in Sorriso, R $ 11.30 / bag in Lucas do Rio Verde, R$ 14.80 / bag in Primavera do Leste and R$ 15.40 / bag in Rondonopolis. The second season has buyer R$ 14/sac Rondonopolis but seller asks R$ 16/sac. In the mid-north, a buyer's market R$ 9/sac, compared to R$ 12.50 Seller / bag.

In Paraná, poor provision of sale, and stable prices. Yesterday, the Department of Agriculture reported that the marketing of the summer harvest is only 55% of the production and the sale of second crop is stuck at 7% of the expected volume. The harvest of the second crop corn has not yet begun in the state.

Tuesday, May 21, 2013

Bunge Yara merger green light

Cade approves purchase of fertilizer assets of Bunge by Yara

By Thiago Resende | Value

BRASILIA -  CADE approved without restrictions, the business in which the Norwegian fertilizer company Yara International intends to acquire Brazilian fertilizer assets of American Bunge.

Announced in December last year, the operation is estimated at $ 750 million. The purchase involves "virtually all assets related to the fertilizer business of Bunge in Brazil, consisting of mixing units located in 22 locations throughout Brazil", 16 owned and six leased, according to information sent by the businesses to Cade. Additionally, other assets such as a phosphate factory will also be acquired by Yara.

"The only asset used in the fertilizer business by Bunge Group that will not be transferred to Yara's Termag, a port terminal used for fertilizer in the port of Santos,"  companies completed to notify the transaction to the national antitrust.

Yara The group primarily operates in the production and sale of fertilizers, and sale of ammonia. Thus, companies recognize the business generates a higher concentration by the Norwegian market, but without "cause any competitive concern, in view of the "high rivalry" in the industry.

The process was analyzed by the new law antitrust and now, with the endorsement of Cade, companies can perform the operation. The green light was given by order of the Superintendent-General of the agency published today in the "Official Gazette" and therefore the case does not need to undergo trial in plenary Cade.

Monday, May 20, 2013

Mato Grosso corn and railroads

A few news items in the news today.

Brazil government plans to buy 8 million tons of
2nd crop corn to help prop up prices and help
with logistics to get Mato Grosso corn to the
Northeast and to the ports.

Spot Mato Grosso corn is at US$ 2.72/ bushel locally(Sorriso.)

Govt will come in at R$ 15/sac which is about US$ 3.40/bushel.

This will help buffer the surge.

Also this week progress on East/West railroad details.
After 3 years of dilly dallying, it will become official that
Lucas do Rio Verde will be the site of a dry port and
railway depot. Various public announcements are being
scheduled from Brasilia to Cuiaba to Lucas.

Lots of pats on the back and congrats will be handed
out again. Just like three years ago!!!!!!!!!
I was there......
I have heard and seen all this before.

Let us hope during the upcoming dry season BR 163
can get 90% paved to Santarem and maybe in 2014
we can break ground on the railroad.
The new forecast for a functioning railroad is now
2017/2018 crop year. I can hardly wait.

Wednesday, May 15, 2013

NE drought

Near Bom Jesus, Piaui, Brazil

Soybeans being disked under due to extreme drought conditions
NE Brazil

Monday, May 13, 2013

Warm and sunny

Another warm and sunny week in central Brazil.

I know many analysts are talking circa 78 mmt tons
for the total Brazil corn crop. The 2nd crop keeps
getting bigger. I kinda doubt it. It will be big but
not Mega big. Too much of the 2nd crop corn got planted
in late February and early March. The rains ended at
the normal time of mid April. The last corn to be planted
will not be much. It might be just a cover crop.
There is a corn plant but no cob.

I also am hesitant to rubber stamp the recent media
reference to a 1.2 million hectare increase in Brazil´s
planted area of soybeans for 2014. I really doubt that.

The last two years we have seen the surge in soybean area
for Brazil. It is time to stand pat and plateau for a bit.
The USA will likely plant copious amounts of soybeans
before this late season is done. The USA will likely produce
3.5 billion bushels of soybeans in 2013. Let us hope China
imports 69MMT of soy in 2014 or look out below.

INCRA recently released a parcel of land to a foreigner
group. We have been in a holding pattern with regards
to this tract for one year. A good sign and good news for
those interested in Brazil land.

Brazil land is still a bit pricey. Asking prices in sacs of
soybeans are still firm.

Thank you to all the newsletter renewals of late and
VIP clients that confide in me. Very much appreciated.

Wednesday, May 8, 2013

Soybeans to USA

Brazil and Paraguay will export soybeans to the U.S. - traders

Wednesday, May 8, 2013 15:22 EDT
BUENOS AIRES, Aug 8 (Reuters) - Brazil and Paraguay are ready to export soy to the United States, at a time when the U.S. market is facing a shortage in the offseason after breaking harvest in 2012, industry sources said Wednesday.
After suffering the worst drought since the 1930s, it is estimated that the reserves U.S. soybean retreat until the end of summer, to its lowest level in nine years.
In the grain market of Chicago, rumors circulate of shipments of South American oilseed being sent north, but so far not confirmed any shipping during this season.
"The operations are closed and the boats have been nominated. Accordingly, it is done," he told Reuters operator of an exporter, based in Buenos Aires.
The source said that a ship is scheduled to depart this month the port of Ilheus, in northeastern Brazil, while the other is supposed to leave the terminal port of Nueva Palmira, Uruguay, used by Paraguayans to ship grain.
"At least three shipments were traded yesterday (Tuesday) to send Soy in Paraguay and Brazil to the U.S.," said another trader with knowledge of agricultural operations.
The next soybean crop will be harvested in the U.S. only in three or four months and physical markets in regions of soybean processing record currently historically higher prices for a spring, due to tight inventories.
(By Hugh Bronstein)

2nd crop corn potentials

2013 Brazil Corn Expedition
Second crop 'safrinha' of 40.58 million raises total corn crop to 76.88 million t
With record production, Brazil awaits definitions on United States planting - which remains behind schedule - with the challenge of sustaining prices and shipments
Brazilian farmers placed their bets high and are about to retire from field activities after yet another record winter corn production of 40.58 million tonnes. This estimate is from the Brazil Corn Expedition, a project conceived by Agronegócio Gazeta do Povo, INTL FCStone consultancy and the Mato Grosso Institute of Agricultural Economics (Imea) who toured the five major producing states of the grain's second crop in recent weeks. The grain's harvest, which should begin next month, exceeds for the second year in a row the volume produced in the summer, making the term 'safrinha' (or the "little crop" in Portuguese) a thing of the past.  In the field, the winter harvest has earned a more appropriate nickname – ‘safrona’, meaning the "big crop".
During a 7,000 km trip through Mato Grosso, Paraná, Mato Grosso do Sul, Goiás and São Paulo technicians and journalists confirmed optimistic expectations for production. And it's no surprise. Following gains from last winter, farmers put into practice a recipe for high productivity. Soils were well fertilized and most used high-tech seeds. To top it off, the climate was almost as perfect as in 2012.
The few areas needing rain to reach yields equal to or higher than last year, found salvation. In Paraná - the second largest domestic producer of the crop - it rained last weekend in much of the dry areas. "I still have not confirmed with my father, but I think the rain was around 15 mm. It came at a good time. Now, we hope that the colder days won't cause us any damage", said agronomy student Pedro Versari, who works with his father David on a property of 600 hectares planted with winter corn. They believe they will be able to achieve the same average productivity as last year, equivalent to more than 82 bags per hectare.
On the other hand, the projected crop is a red flag for Brazil, which must confront the challenge of increasing its exports in a year of stable domestic consumption, the recovery of the largest global producers and suppliers (United States), and weak advanced sales. Sales of the winter grain continue at a pace 50% below the same time last year, the Corn Expedition found.
Altogether, Brazil will dump 76.88 million tonnes of corn into the market, considering summer (36.3 million/t) and winter production. With domestic demand at 52 million tonnes, the country is expected to end the year with more than 16 million tonnes in stock, the largest in history. To make matters worse, the delay in soybean shipments since the beginning of the year will also likely influence the market for the cereal.  "Corn will only likely begin to be shipped out of the country in August and September, which is very worrisome, because it will be at the same time that the United States is to begin its harvest," said Otávio Celidonio, superintendent of Imea.
The future scenario has already started coming true. According to a survey conducted by the consulting firm FCStone, "from February to January [the National Supply Company's crop year] exports in the 2012/13 crop accumulated 4.5 million tonnes, representing 30% of the 15 million estimated for the entire cycle." Last week, the performance of corn futures prices was marked by fears over delays in planting, which served as a factor of support, according to a weekly report from the consultancy.
The document emphasizes that the cold and wet weather in the United States' Corn Belt throughout the week complicated planting and reinforced expectations of greater potential to transfer area from ​​corn to soybeans if the delay persists. 80% of the crop is expected to be planted after May 15, demonstrating the record delay, the report shows.
Brazil Corn - Aside from Agronegócio Gazeta do Povo, FCStone and Imea, the Brazil Corn Expedition received support from Sicredi, Montana and Perfipar.

Luana Gomes
Jornalista/Analista de Agronegócio - Gazeta do PovoGRPCOM – Grupo Paranaense de Comunicação
41 3321.5366 | 41 9187.4305           
Descrição: assinatura-jornais.jpg

Monday, May 6, 2013

May 6 Mato Grosso update

I chatted with some friends in Mato Grosso this morning.

We are finishing up on a land deal. Good news indeed.

Lots of new things happening out in Mato Grosso. Expansion
of animal numbers, corn ethanol mills, etc.

The last rain was 10 days ago. It would have been best
if the 2nd crop corn could have received one more drink.

The last planted corn will not be much. It will be harvested, but
yield will be very low.

This will subdue the large volumes forecasted by various

I look to be in Mato Grosso in early June.