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.