Sunday, December 21, 2014

Happy Holidays

Early soy harvest is nigh

Rains the past two weeks have been good.

We see some disease pressure here and there, but for the most
part a very nice crop is on the way.

There have been a few early soybean fields harvested under pivots
in Mato Grosso. 

The first 5% of the crop will be ready about January 5th-10th.
There will be a spurt of early harvest and then a 3-4 week gap.

February 1st will start a historic harvest logistically for Mato Grosso
and Parana. The amount of soybeans that need to be harvested, trucked,
dryed, and trucked again will be mind boggling. The ideal 2nd crop corn
window will be the first two weeks of February. After that, the yields will
start to decrease.

For much of the country the harvest will be in March and April this year.

A key point to continue to watch will be the Northeast quadrant.
There is 10 million tons + up there. If Brazil is to produce 95 mmt, it needs
to come from up there in April.
The region seems to have broken its drought pattern of the last two seasons,

Sao Paulo city is in need to copious amounts of rain if they are to have enough
water to make it through 2015.
The situation is much like that of California valleys. We are dealing with a multi-year

Conab is forecasting a bit of a drop for the 2015 sugarcane season.
Two years ago there was much investment in renovation of areas.
The drought pattern nipped that potential. It is very hard to recover from.

I disagree with Celeres optimistic Brazil corn crop forecast for 2015.
The stars need to align perfectly just to maintain par much less increase
year over year.

There is much talk of using non-BT corn varieties this season. This will
nip yield potential. The the caterpillars are already becoming immune to
the BT traits.

Thank you for all the renewals and vote of confidence recently.
It is truly appreciated.

Merry Christmas

Kory and Brazilintl team

Tuesday, December 9, 2014

It´s all about February weather from here on out......

Rains have been nice lately.

Back to normal one could say.

I was in southern Goias last week. The soybeans were so small compared
to last year at this time. They are a month behind normal.

There will be some early soy harvested in Mato Grosso and Parana
about January 1 - maybe 10% of the crop.

Very little of this soy will make it to port. Most will go to crushers
that have very attractive bids for early delivery.

Last week IMEA of Mato Grosso decreased their projected planted
area of 2nd crop corn by 400,000 ha.

This crop cycle comes down to February. If we have decent harvest
weather, Brazil can harvest a very nice soy crop and get a 2nd crop
corn in the ground and all will be OK.


If we have a 2 week rain even in February, katie bar the door.

Soybean harvest then gets pushed to 2nd half of February and
very little time to get projected area planted.

Even if producers push the envelope and plant until March 5 or the 10th,
their luck may run out this year.

The previous two crop cycles they have had rains into May.
This has generated record yields with GMO BT corn varieties.

The talk is to go back to conventional hybrids or RR only and
spray for insects as needed with chemicals.

Many will cut back on Nitrogen if they plant in late February.

There are big swings in production ahead. 10 million tons easily
in 2nd crop corn one way or another.

Soybeans at the moment look good but need time.

For the next two weeks, forecasts look good.

It is all about February !!!!!!!!!!!!  I repeat  FEB !!!!

Happy Holidays

Saturday, November 22, 2014

Brazilian partners, English, Next generation, Investment ideas

Investment ideas 2.0

On my travels to Mato Grosso and throughout Brazil, I am always looking for who the new
leaders in Ag and Ag business will be.

I am speaking of the 2nd generation Mato Grosso pioneers that want to stay and follow
in their fathers footsteps. The age of these new pioneers are 18 to 30 years old.

There are a handful of brilliant, passionate, globally educated males and females
that are back running the family business and looking for a way to take their ideas
to the next level- to go international.

I have found a handful that speak perfect English, traveled the world, and are what
I call dynamic business-minded people ready to take their family business to next level.

People like this are literally 1 in a million. The thing many foreigners do not grasp is that
well to do families send their kids abroad to then come back home and help the family
business grow.These young people are not looking for a job per sey. They are looking for
opportunities to put their knowledge, know how, and who they know to work.

In USA, for example, a well to do family will send their son or daughter off to a well known
college and then encourage them join a company or start their own business before they are
incorporated in the family business. We in the USA tend to learn how to fail. Learn how a business
is run and work with people.

In Brazil, a wealthy family tends to look at getting a job either during or after college as
demeaning to the family image. The family business has more than enough to go around.
Thus, we see a different dynamic unfold.

I have been approached by young dynamic Brazilian male and females to form partnerships
with foreign investors. This is a broad range of interests.
These range from:

A Brazilian partner to help buy land
Non- GMO seed sales rice and soy
Cattle feedlots
ethanol mills/value added processing
Tourism locals hotels and R&R locals/ environmental tourism
Transport and  grain storage facilities and monitoring systems

There are many other possibilities ranging from restaurant chains, American
bar and grill themes, to sky diving in Brazil.

For those interested in thinking outside the box be it Brazilian or Gringo,
please drop me a note and we can chat about this and I can offer some
feedback as to what does and does not work in Brazil.

We are in a phase now where dollars are leaving Brazil and Brazil has a
scarlet letter on her flag at the moment. This will pass.
I think we are within a year of Brazil recovering and regaining some growth again.
The point is that one needs boots on the ground and due diligence needs to be
done prior to the next wave starting. One needs to be ready.

There are a handful of very dynamic "20 somethings" that are itching to do
what their fathers have done again. But this time it will be Ag 2.0 and 3.0
Internet, robots, drones,What´s App, processing, value added, etc that will turbo
charge the next decade. When I first came in 2001, one was lucky to have
a cell phone much less a signal !!!!

The next phase is not linear growth, it is exponential.


Wednesday, November 19, 2014

Brazil corn ethanol, soy germination, lower crop sizes

I am back at headquarters after a 10 day loop in Mato Grosso.

I have never seen such extremes in the soybean crop at this time of year.
One side of the road was just planted and the other side was 40 days old.

We will see average yields and also some great yields this season.
Two major concerns by producers this season. Below optimum germination and also
short soybeans. The bottom pods will likely be lying on the ground. It makes harvest difficult and
slow. With the 3-4 week delay in planting, many of the soybean totes were stored in sheds with
no ventilation. The temps inside these sheds rose to 120 deg F at times. Many producers blame
light stands on a drop in germination vigor because of this.

Abiove has lowered their crop size estimate for Brazil. I think IMEA will be next to drop
the size of the Mato Grosso crop. I think we are looking at a crop size the same as last year.

Talk of planting marginal land back in to pasture is picking up. Cattle are gold on 4 legs.
Soybeans are not gold at the moment. Back in the black yes, but not gold.

Above is a you tube video of the beginning phase of the Fiagril/USA joint venture
corn ethanol mill in Lucas do Rio Verde.

Clients and subscribers have been updated on almost a daily basis while I have been on
tour. Newsletters and VIP consult retainers are available on my site via Pay Pal or USA
bank wire upon request.

Retainers and subscriptions will go up in 2015. 7-10% to compensate for inflation.
For anyone interested, I will hold the 2014 price for you for a few more weeks.
New subscribers only

Many tours being planned for early 2015. Crop tours, Ag biz and 2nd crop
corn will be high on the interest list. Limited space available.

Drop me a note for more info.

Rains for the most part are normalizing. Next 5 days look wet.
However, the last 5 days in Goiania were supposed to be wet, and
we have not received a drop.



Wednesday, November 5, 2014

2015 crop tours

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

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

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 for more info.


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

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.

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.

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.

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.

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:

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.


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?


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

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

Sunday, September 7, 2014

Full speed ahead- into the black hole

The whole Brazil soybean expansion talk for the 2015 crop cycle reminds
me of an episode of Star Trek.

A scene where Captain Kirk is flying by the seat of his pants and
Spock is in the corner with a raised eyebrow saying that this action
is "highly unadvisable Captain."

Captain Kirk: "What is that up ahead?"
Spock: " It is a black hole Captain" (anecdotal reference to Brazil soybean expansion)
Captain Kirk: "Can we fly through it?"
Spock: " That would be highly unadvisable Captain."
Captain Kirk: "Scotty, can you give me warp 9?" (anecdotal reference to Brazil´s rate of expansion)
Scotty: " I can for a bit, but she likely come out the other side in pieces."
Captain Kirk: " Sulu, Warp 9 straight through middle."
Sulu: "Aye, Aye Captain"
Bones: "Are you bloody insane Jim? You gonna kill us all"
Spock: " Humans, highly illogical."

:Scene ends:

I sent out my September part II newsletter Saturday to subscribers.

I was trying to think of a colorful anecdotal reference to help describe the current situation
in Brazil with regards to soybean expansion.

Last night, I thought of an old Star Trek scene where Kirk risks everyone´s life,
"just because he can" type feeling.

The global soybean stocks will soon be back into balance and even increasing in size.
We have read many forecasts about how much Brazil will expand for the 2015 crop cycle.
The Ag minister is "guaranteeing 200 million tons" (soy,corn, rice, wheat, cotton seeds)
Lanworth says Brazil soy crop at 98 million tons  ???
Many reputable analysts are expecting a 1.5 milllion hectare soybean area surge-
on top of last years 2 million hectare surge.
USA has recently surged 8 million acres
Future soybean prices are telling us all to tap the brakes
But when I see and hear of many new areas that have been prepped in Mato
Grosso and elsewhere for 2015 soybeans, I feel like we are all headed into
a black hole and at very high velocity and no one is sounding the alarm bell
as to what it will look like on the other side.

Several years of 14,16, and even a glimpse of 18 dollar soybeans in Chicago
has been like a large dose of heroin to a farmer´s soybean glands.

Don´t worry, it will be ok, plant a little more..........  take another hit dude!!!!!

I am beginning to feel like Brazil is the starship Enterprise and if we go fast
enough through the black hole, it will be OK.

China will be there to pick up the pieces......

But what if the Chinese are really "Klingons" on the other side??!!!!!

If there was ever a year to hope for a drought somewhere, it is this one.
We need to whack 10 million tons off the South America production
potential, or look out below.

All I see are adequate to above normal rainfalls of late in Brazil and
Argentina. It is not looking "droughty" by any means.

Buckle up, we are going for a ride!!!!!

Wednesday, September 3, 2014

Corn ethanol mill for Mato Grosso

This project has been two years in the making.

Ground breaking should occur yet this year.

I think this mill will be the first of many for Mato Grosso.

With so many obstacles to investing in Brazil, it makes me
smile when I see success stories.

Good luck!!!!!

Wednesday, August 27, 2014

Changes in the wind

Hot and dry here in the Cerrado.

So many contradicting articles and forecasts these days.

It makes it hard to square the circle.

Soybean area is projected to increase.
Soybean economics argue the opposite.

USA has killed the bull market.
Brazilian farmers are poised to put the final nail in coffin
as per soy prices. They will plant a record area at their own peril.

Sugarcane investment two years ago with renovation of stands
and expanded area to get ready for the future demand pull.

Sugarcane in the Central/South region of Brazil is now said to
be 546 million tons. We started out the year thinking close to
600 mmt ton after the drought nipped the area.

Keep in mind the forecasts two years ago were predicting
upwards of 700 mmt of cane for this year.
Now we are going backwards with new stands and very little
hope of the 2015/16 crop rebounding much.

The two step continues. One step forward and two steps back.

The newest kicker to the Brazilian Samba is that all three Presidential
candidates are equal in their standings. +/-

Marina Silva and President Dilma are neck and neck in a
Presidential runoff. Polls indicate that Marian Silva could
pull this off.

Marina is an environmentalist. She does not like this messing around in the
Amazon. Leave it alone!!!!

I do not think she would be favorable to the Brazilian farmer or the ag sector
in general. President Dilma at the end of the day might be the better choice
for Brazil ag- as crazy as that sounds !!!!!!!!!!!

If Marina would be elected, I bet she would shut down the construction of the
HUGE Belo Monte Dam project. This is a blow to the energy needs of the country.
Brazil is on borrowed voltage now during the dry season.

That issue alone throws such a big monkey wrench into Brazil´s long term
infrastructure development that its hard to even grasp the unintended consequences of
such a decision today.

Save the rain forest in a small area but throw the whole country into recession
because of that action????

Brazil is as "foggy" as I have ever seen it over the last 13 years.
By foggy, I mean the inability to see the future clearly.

There are such polarizing events in the near future.
Dollar exchange rate
Lower soybean prices
Possible new Cabinet and new Ministers
Review of infrastructure projects?
Forest code review?
How to provide incentive to sugar sector?
Increase in gasoline prices by November
How to calm inflationary pressures?
These items are in conjunction with all the other systemic issues such
as corruption, health care, education and economic development.

So far the Dollar Forex markets like Marina Silva.
I find that odd.

Newsletter available by clicking here:

Wednesday, August 20, 2014

Rains in forecast for southern Brazil

New 6 to 10 day precip forecasts show rains reaching
up into the southern edges of the Brazilian Cerrado.

Good sign

Saturday, August 16, 2014

30 days until planting 50 days until elections

I have been a bit slow this week.

I have been battling a Brazilian winter cold.
It seems hard to believe one can have a cold when its
85 degrees outside. Low humidity is hard on the lungs.

Dry season is intact yet. It does not look like an early
start to planting which can begin in 30 days.

Lots of talk about how much Brazil will expand for 2015.
In the same sentence they talk about cutting costs.

At the end of the day, I do not think Brazil will expand as
much as they think.

I am watching the Northeast drought. The NE tends to
move in seven year cycles. Seven years above normal
rains with good crops and 7 years below average rains
with less than optimal crops.

We are starting year 3 of the drought.

Brazilians are dealing with the loss of one of the Presidential
candidates this week. It opens up the whole Presidential
political landscape again.

Machinery sales are slow with dealers offering more
and more incentives to keep stuff moving.

With the recent trade deals with Russia. The general public
feels that more and more meat will got there and inflation on
food items will continue higher here.

The average family and lower classes are really starting to feel
this increased cost of living.

Crime is on the increase. Seems like everyday a hold up, car is stolen,
or some sort of bandit story locally.

Thursday, August 7, 2014

Politics,Cows, Chickens,Pork, Russia, and Ethanol

Exciting week in Brazil.

The government is in the process of increasing the ethanol mandate to a 27.5% mix.
Bio-diesel increases from 6% to 7% in November.

This is a last ditch attempt the pander to sugar industry pre-election.

The government also announced that corn auctions will start on August 20th.
R$ 500 million will be liberated to pay premiums to farmers that sell below
the minimum price of R$ 13.52/sac. US$ 2.50/bushel

It is amazing how fast they can act when Brazil is in the drivers seat.
Russia gives the USA the middle finger and Brazil just loves that.

Upteen slaughter houses were magically approved over night by Russian
inspectors. The flood gates are open for Brazilian Beef, Chicken,Pork and Dairy.

The dollar is at 2.30:1.

Brazil´s economy continues to suck Argentine cold air off the South Pole.

I think we will see 2.35 to 2.40:1 in coming weeks.

My bet is that Central bank will draw a line in the Cerrado at R$2.40.
Sell dollar swaps at any cost to protect 2.40:1 or lower.

Brazilian sugarcane is stuck at 660 million tons for 2014/15.
Exact same size as 2013/2014.

Millions were invested in renewed stands and expanded area.
Net result-  zippo

The drought took 10-15% of the top end off and that was the surge
potential going into this growing season.

We maybe can add 5% back to the total for 2015/2016.
It will be a hard row to hoe.

Less than 58 days to election.

Place your bets.

Saturday, August 2, 2014

Productivity starts Monday in Brazil

I think we can sum up 2014 as the lost year for Brazil.

So much energy and resources were wasted gearing up for the
World Cup that everyone forgot to work this year.

The hot item in Brazil for 2014 was big screen TV´s.

I now go to discount stores and there are stacks of 40 and
50 inch TV´s being marked down.

Everyone forgot to buy cars, trucks, clothes washers, and
most everything else the past 7 months.

The industrial productivity in all sectors continue to wane.

School starts again Monday. Everyone is back from their
"winter" vacations and things will start to function again.

I told clients back in June, if you do not have an answer
from a governmental agency by June 5-10th, do not
look for one until August.

Between the World Cup interruptions and the normal
Winter break, many agencies simply do not function when the
boss is out on holiday with his family.

To further complicate things, we have an election on Oct 5th.

There are smoke signals on the horizon saying that the political
winds are about to change.

There two productive months for government to work- a little bit.

But if there is the certainty of a change of leadership, this could
cause more delays.

We have a new minister of Ag in Brazil. If President Dilma is
not re-elected, that means a whole new administration and
cabinet by January 1.

What does that mean for ag support programs, railroad projects,
funding for many projects??

It could mean a review of everything. It can mean a 6 month to
one year delay again on projects that were assumed approved.

I am all for change, but 2015 seems disruptive to me.

Lots of new faces and power plays that we have no idea how they
will manifest today.

It is political season. There will be many announcements for projects
here- there- and everywhere.

There will be last ditch attempts to try and buy this election and
remain in power.

It has been 12 years of power by PT party. If they lose, there will
be some dry heaves as the new power dynamic structures itself.

It makes for great drama, but terrible for getting anything done.

updates available here:

Tuesday, July 29, 2014

Tastes great, Less filling

A farmers organization in Mato Grosso has filed a complaint against
the large corn seed companies.

The BT corn seed is said to be resistant to caterpillars.

This past season producers needed to apply insecticide in conjunction
with the seed trait to control them.

Some caterpillars say the corn tastes great,


Say the corn is less filling.

This new evolution needs to be watched with the soon to
be planted RRII intacta trait in soybeans.

I have heard that a few producers did need to spray insecticide
on 2nd crop soybeans to control the Helicoverpa armigera.

Farmers are happy to pay for tech fee if they get results.

If they do not, a novella starts.

* novella = soap opera

Friday, July 25, 2014

Early season rains in Cerrado

It´s raining !!!!!


Normally this time of year is hot and dry. Last night it rained on and off all night.
I am not complaining but simply making the observation that I have never experienced this
the past 13+ years.

It is making cotton harvest difficult in Mato Grosso. Sugarcane harvest is being delayed in
Sao Paulo and Goias.

I am watching the evolution of cashflows in Argentina and Brazil for 2015.
Many dynamics factors come into play.

Currency FX, inflation, pre-paid inputs verses projected new crop cashflow,
trade ratio in sacs, possible changes in export tax rates and what does that mean
for Argentine gov´t?, machinery sales on the decline,  Presidential election and possible
changes in cabinet,  what next?

Monday, July 21, 2014

Don´t hit on 17

I keep reading more articles about how Brazil and Mato Grosso are going to expand 4 to 5% again in area for 2015. When we look at fertilizer sales data to date, it is easy to make that argument.
In recent years, I would have agreed.

New crop soybean prices for central Mato Grosso are down to USD 16.50 to USD 17.50 per bag.
This is about US$ 7.50/bushel locally for March 2015 delivery.

This will be hard for many producers to swallow as we go into the the Mega USA harvest.

Futures will likely go lower, but I think port bid premiums will rise and compensate for
CME losses and Brazil freight costs- at least to some extent.

We know the Brazil farmer has locked in his fertilizer cost of production months ago.
To some extent his chemicals and seeds have also been taken care of. Keep in mind
that he will plant a lot more Intacta RRII this year which means he is exposing himself
to higher tech fees in lieu of higher chemical/insecticide costs.

There is no rule saying he has to apply all the fertilizer he bought. He could shoot
for productivity or roll some fertilizer forward too.

I am sure there are a few farmers/farming groups that are finishing prepping a some new areas
that were started two or three years ago. In my mind, statistically insignificant.

Many talk about the high soy/corn ratio and it favors soy.

The caveat is that soybean cost of production is also at record highs.
It needs to be a high ratio just to maintain!!!!!!!!!!!!!!!  not switch!!!!!!!!
Those not living in Brazil are clueless to this data point.
Chicago people need to come to Brazil to comprehend this.

I do not think Brazil will plant 31 million hectares this season by the time
all is said and done. A few guys might actually seed some areas back into pasture !!!
Cows are good money !!!!!

2015 soybean cycle can be summerized like this.

I am sitting at Caesars blackjack table with a 100K on the table.
I am dealt a 17 and the dealer is showing a 10 up.
I know in my bones she likely has a 20 hand.

* dealer in this scenario is CME

Do not hit on 17 !!!!  stand pat !!!!!

I need to let this hand go !!!!!!!!!!!!

We will wait until March for the dealer to flip her card over.

If the dollar is 2.50:1 at the time, she will flip over a 7 and
and we had a 6 month "PUSH". We bought another year.

For those thinking she has a 6 underneath and needs a card,
you are betting on the Northeast drought in Brazil continuing.

If she is hiding an ace, you are all going to need new underwear
by March.

Brazil 6 to 10 day precip maps are showing chances of early
rains starting. Very rare if so.

If the Northeast can grab some rains this season, Brazil will produce
93 million tons on same area as last year.  Period.

Waitress,  I need another Corona and lime while I wait.



Here is a 25 dollar chip for you honey.

For those who want more wisdom as to when to take a hit,
click here:

Wednesday, July 16, 2014

Born again Brazilian

I am back from a 50 day visit to USA.

We did the stardard family thing. Orlando, Mall of America in Minnesota,
and family, cousins, and old neighbor visits. I also managed to visit a few clients along
the way.

It was good for me to get back to the states. It seems like when we spend too
much time in any local, we tend to develope fish bowl tendencies. We get so
caught up in our own little worlds that we cannot see the fish from the sharks.
In recent years, I have found myself becoming more cynical about Brazil.
It is easy to do. Inflation, hospitals, education, cost of living(Custo Brasil), government,
restrictions on foreign ownership of land, currency manipulation, among
many other things make it easy to criticize. Shame on me. I promise to do
better and try and find a positive at the end of any event or situation.

As I got back to Brasilia, I found myself wanting to kiss the ground.
I was delighted to back to Brazil.

I am a Born again Brasilian;. albeit falsificado, I do love it here.

This may sound silly, but I had forgotten what wind was like.

We are having a very strange weather in Northwest Minnesota this season.
It has been cool, rainy and windy. Small grain crops love it. Corn and soy
are suffering. They need heat.

In Brazil, at least in the Cerrado, we do not have wind. In NW MN, a 30 mph
wind in March or October is normal. But a NW wind in July, that is some strange
polar vortex voodoo happening.

I think I had forgotten why I had fell in love with Brazil in the first place.

Climate, girls, carinhoso(caring bunch of people), and a general sense of
belonging(you are welcome here).......

Do not get me wrong, I enjoyed visiting with family, cousins and neighbors.
The cold rainy weather was actually a gift for me to spend some quality time
with many. If it was 85 deg and sunny, no one would have had time for us.
With 45 degree July mornings, everyone had time !!!!!!!!!!!!!!!!!

Brazil has many positives about her. I will try and focus more on those
items in the future.

My wife was very impressed with airports, malls, public restrooms
wherever we went. She was facinated at how the toilets flushed themselves.
She was impressed with the high technology.

Food, car rentals, clothes, and Wallmart souviners are rediculously
cheap in USA. It is hard not to lose control. 10 dollar Levi pants
at Sears compared to R$ 200 for same jeans at shopping mall
in Brazil. It makes it hard to square the circle.

I went to USA with the idea that I would bring back two I-phone 5´s
for myself and my son. It seems like every Brazilian teenager has an
I-phone 5 for R$ 2500 per. I looked at them for US$ 690 dollars with
tax and said I am not worth that much. I do not need it and a new
bill in the mail each month for data and nano chip account.
I can wait.

My son agreed. A new I-pad mini for him and a Mac Book Pro
Retina for Papai. We can be productive with this.

Thank you to all those who helped with our trip´s logisitics.
It is greatly appreciated.

My son just got his first taste of international travel at 11 years old.
From here, all things are now possible. We do not need to fear
those people over there. It is a small world.

Sunday, May 25, 2014

Brazil B-7 by Sept

To help Petrobras, the government will increase to 7% blend of biodiesel for diesel
Measure can reduce by R$ 1 billion of state imports

Harvest in Paraná: government wants to increase biodiesel production to alleviate the deficit in petroleum account

BRASILIA - President Dilma Rousseff will sign next week an interim measure to increase from 5% to 6%, the mixture of biodiesel to diesel fuel sold at pumps, starting in July.

The prosecutor will also provide for the increase in the percentage to 7% in September.

The main objective of the measure is to encourage the production of renewable product in the country, helping Petrobras to reduce imports of fossil diesel and deficit called "petroleum account".
Estimates of shared government-industry indicate that the increase of the mixture of 5% to 7% decrease by 1.2 billion liters per year of diesel imports of the country, an annual savings of R$ 1 billion to Petrobras account. The average monthly imports of diesel last year was 827 million liters, but in January this year the volume imported was a record and reached 1.25 billion liters. The government has insured the price of fuel, to avoid impact on inflation. And Petrobras, in its May report, indicated a loss of 30% of its net profit.

Unpublished survey by the Ministry of Mines and Energy shows that the production and effective use of renewable fuels in Brazil - biodiesel, ethanol and anhydrous ethanol - have stagnated since 2010.

During this period, the demand for fuel jumped 14%, but as there is no domestic production. Enough to meet it, Petrobras had to import gasoline and diesel to supply the market.

The measure also weighs in favor of the environmental aspect, since it will promote the use of clean and renewable fuel to replace fossil. Each percentage point increase in biodiesel blend of diesel is equivalent to planting nearly 7.2 million trees, reveals report "Environmental benefits of production and use of biodiesel," the Ministry of Agriculture, October 2013.

The main raw materials used for the manufacture of biodiesel in Brazil is soybean oil (almost 70% of the total); beef tallow; cottonseed oil; used frying oil; lard; and chicken oil.

The decision to extend participation in the oil biodiesel sold for vehicles has technical support in the government for some time, from the international experience. Trucks that circulate in other countries with similar engines have taken good advantage in terms of power and emissions to 7% blend, known as B7.

 The adoption of the larger percentage as the national standard was hampered, however, the perception that most biodiesel in the blend become the most expensive oil in the distribution, pushing inflation. However, at this juncture, the imported diesel is already about 20% more expensive than the biodiesel produced in Brazil.

A recent study by the Getulio Vargas Foundation (FGV) served to remove the resistors from the Ministry of Finance to measure, because it showed that the increase in productivity of agribusiness and idleness of plants for biodiesel production - currently at 61% of its potential - make changing the mix almost neutral in relation to the impact on the IPCA.

Mixture became mandatory in 2008

Despite the announcement occur almost on the eve of the opening of the 37th biodiesel auction, scheduled for June, the National Petroleum Agency (ANP) is already prepared to make the necessary changes and adopt the mixture of 6%.

- We have practically certain that (the signature) will occur next week, because in June the auction must be conducted so that biodiesel can begin shipping in July. The edict was issued by the ANP with a mixture of 5%. The MP must be published so that the notice is changed - said the president of the Brazilian Biodiesel Union and Biokerosene (Ubrabio), said Odacir Klein.

The mandatory blending of biodiesel to 6% and 7% will increase ten years after the launch of the National Program for Production and Use of Biodiesel (NPPB), when fuel was introduced in the Brazilian energy matrix, with a focus on social inclusion and regional development . While starting to be produced in December 2004, the biodiesel blend only became mandatory from 2008 throughout the country, with 2%. Then it was expanded to 5% in January 2010, anticipating in three years the goal established by Law No. 11.097, of January 13, 2005.

During this period, the government had to adopt a series of adjustments to prevent clogging in engines with higher fuel oxygenation by increasing the proportion of biodiesel. Since then, the specification has changed and there was more careful while handling the product, which, in the evaluation of government agents, ensuring a gradual migration from 5% to 7% with no major mishaps.
- The government is taking this responsibility - said a source familiar with the measures.
The sector, according to Klein, is capable of a mixture of up to 10%, but he points out that "you can not demand that the government increase by 100%" (compared to 5% today). And remember that two years ago had been claiming increasing content of the mixture. Government agrees to discuss further increase, but with technical studies to prove the efficiency.

Thursday, May 22, 2014

PEAK protein- what does it look like?

Beef, pork, shrimp, soy  etc......

Picture seems to be more clear by the day.

Where are the beans??????

Excerpt from July 2012 newsletter.....

Monday, May 19, 2014

Stimulus and railroads

Well, we can sure feel the election promises today.

Gov´t announced mega funding for continued low interest loans
to buy tractors via Moderftota program.  4.5% money with
8 payments and 2 years to skip a payment too.

Various farmers associations are rallying to not support Dilma for

This week President Dilma will be inaugurating the North/South
railroad from Palmas to Anapolis, Goias. 27 years after it was
first announced.

Gov´t officals are in China this week looking for money to
fund the new railroad projects that were announced 4 years ago !!!!!!!!

Hail in Sao Paulo today.

It rained here in Goiania today. Very rare but welcomed.

Lots of bus strikes.

Protesters are organizing for June.

Police also want to strike!!!!

Let the games begin!!!!!!

Thursday, May 15, 2014

Morning chat with Yara Fertilizer dealer

It has been a tough transition for my buddy that used to sell fertilizer for Bunge.

Since the Yara merger, there have been many changes.

Supervisor and personel changes that have not been beneficial.

His old supervisor was put in charge of fertilizer sales to Sugarcane mills.
Thus, taking all his old clients.

Yara sends in a new young hot shot with an attitude problem to be his new boss.
The young buck calls his old soybean clients and sells fertilizer direct to them at
a price R$ 90/ton less than my buddy even knew was possible.

Problem: Young buck sells fertilizer on the cheap and forgets to tell the
client that the fertilizer must be taken now. The client assumes he could take
delivery in August like he always has. Tempers begin to flare-
A new soap opera starts.

Yara has taken a large percentage of regional fertilizer market this season.

Off topic comments:

Kory, there is something funny in the air in Brazil this time. It has me worried.
You have not experienced this in the 10 years you have been here.

Take a look around Kory. Look at the amount of crime. Look at the number
of thefts. Look at the number of stikes going on in the country. It is like a fuse
has been lit. But we don´t know what is on the other end?

The stealing continues on government projects. The World Cup is a mess.
God forbid Brazil does not win the World Cup. The population will burn
the country to the ground. It is good you will be in USA he says.

Combine all of this with what we know. Inflation, high interest rates,
increasing the minimum stipen for the family purse(welfare), election,
Petrobras economics that make no sense, and a middle class that continues
to pay more taxes and sees little in return. The health system is on verge
of collapse and yet all people worry about is how to buy a ticket for the
final match of World Cup valued at R$15,000- R$ 20,000/ seat.
In some cases higher.

For the first time in a long time, this all has me worried. It is different
this time he says. It smells different.

There is something in the wind..........

Enjoy the show,

all for now


Friday, May 9, 2014

Conab as expected

Thursday´s Conab report was as expected.

The soy production numbers continue to increase after the
sharp drop in March. They went too far too fast.
Subscribers were forewarned of this months ago.

On Wednesday this week our Ag minister has been quoted
saying that Brazil crop is 89-90 mmt.

We have yet to see reliable numbers as to how much
2nd crop soy has been planted.

I think 1.5 to 2 mmt tons of "Bonus soy" or "Mario Bros power up"
bonus soy will be harvested in June. This will add a few gold coins to the hopper.

This will take the Brazil crop to about 88 mmt for a final tally.

The dry season has kicked in on time and this will hurt the late
planted corn in Mato Grosso. Lighter soils will burn up before
complete ear fill.

Thank you for all the loyal subscribers. Many have renewed this
week after being with me since the beginning. The newsletter is
going on 8 years old now after very humble beginnings.

It is appreciated.

I am headed to USA at the end of May.

Mickey, Nasa, Mall of America and Minnesota lake country
are on deck.

I will keep tabs on things the best I can.

Personal comment: With the massive surge is Brazilian soybean area
the past three seasons, I am looking for a plateau at this level for a bit.
The soy economics do not justify the rampant expansion of area going forward
as we have seen in the recent past.


Friday, May 2, 2014

Bigger Brazil soy crop

Informa came out today with a revised Brazilian soybean crop at 87.4 MMT. + 650,000 tons
All I can say is Amen.

I have been saying for weeks that I thought the earlier estimates of 84-85 mmt
by some were too low.

We are still looking for more data as per how many hectares of 2nd crop soybeans
have been planted. The ranges are from 200,000 ha to 745,000 ha.
My opinion is more to the latter.

I think next week Conab will increase their estimate of soy crop also.
They went too far too fast back in March.

I think back to short crop years in the USA. The markets lost their minds
when we heard of 1 or 2 boats were on their way to Wilmington, DE from
South America. Boom soybeans down 30 cents.

Now we have a situation of just in time soybeans headed north. We are now looking at 20+ boats of soybeans and meal. Rumors of 30+ boats by the end of the day(i.e. summer 2014).

75 to 90 million bushels of imports of soy equivalents from Canada, Brazil and Argentina are
now possible and likely. Say that three times and click your heals together Dorothy, this
ain´t Kansas anymore!!!!!

What used to be the bare bones minimum for USA soy supply carryover is now coming
from the Southern Hemisphere!!!

This is a paradigm shift. Chicago and cash bids now need to adjust themselves to incentivize
imports from SA via direct bookings or China cancellations.

We are also doing this with ethanol.

We read about the Chinese being expert traders. I sometimes wonder as we look at how the
last 6 months has played out. China bought every last soybean they could from USA. At the same
time double booking Brazilian soybeans. Brazil ports performed perfectly this year and we end up drowning
the super duper Chinese ports and crushers. Sure looks like a case where the right hand does not know what the left hand is doing.

The end result is soybeans being shipped backwards up the Mississippi to get to the crushers
for just in time crushing. Crazy as a jelly bean policy.

In closing we need to give credit where credit is due. The Bunge/Maggi JV that built a dry port
in Para state and between trucks and barges got soybeans to the mouth of the Amazon to load
a Panamax this week. Well done.

We will see more and more of this in the coming years. Mato Grosso soy and corn headed
north now. Cargill blazed the trail 10 years ago at Santarem. They endured many protests
and judicial injunctions. Now Bunge and Maggi have added to the options. I expect more
in coming years. Mato Grosso soybeans must go north. It is only logical.

More roads and railroads will mean easier logistics to China, Europe, and USA on the years
with sub par soy production. Emergency soybeans to the rescue. They will be a hop, skip and a jump away.

Twenty years ago with NAFTA etc, grain going across country borders was considered a sin by many.

Today, it is normal operating procedure.

Imagine another 20 years ...........

Saturday, April 26, 2014

Northern soybean route picks up steam

Soybeans shipped north by truck to the Tapajos river and then barged to Belem
were loaded on a Panamax ship and headed to Spain this week.
Most likely non- GMO soy.

This route is said to be ready to handle 2 million tons in 2015.

8 million tons by 2018.

We need to get a little more asphalt installed in Para state the next 12 months.
With that road in place, trucks should be able to roll north with more ease
than the mud stricken history of the road.

In the time, the basis will inverse in central and northern Mato Grosso.

The port on the Tapajos is a Maggi Group and Bunge JV.

Sunday, April 20, 2014

Looking ahead into May

Easter holiday April 18- April 21 here in Brazil.
Everyone is traveling it seems.

I will be going to Agrishow next week in Sao Paulo state.
It is South America´s largest ag show.
I will be talking to many equipment dealers and taking many photos.
I plan to send out a May special edition newsletter after I get back.

Subscriber link:

Rainfall has been beneficial lately for 2nd crop corn and sugarcane.
2nd crop corn that is planted on high clay content soils will likely make it.

We still need to watch early May rains. If rains shut off next week, as per normal,
30% of 2nd crop corn will be at risk. If the rains keep coming, they boys will get lucky
one more time.

As the saying goes for Northern Minnesota, late Easter = late planting.
As they say in Brazil, late Easter = late rains and slow start to dry season.
"Kinda interesting huh?"

Land market seems stable at moment. Sellers do not need to sell and buyers are
reluctant to chase land values. World Cup soccer starts in June. Combine this with
presidential election in October, many are taking a wait and see attitude.

Cattle prices have posted a record high in Mato Grosso last week. Maybe the cowboys
are winning vs the soybean farmers at the moment?

I really really hope central Mato Grosso can break ground on something in coming months.
Be it and a corn ethanol mill or the railroad. If we dilly dally one more dry season and maybe
change presidents in October, that means a cabinet change by January and maybe a review
of everything again. The clock ticks and ticks and ticks...........

Conab came out with a report saying that Brazil is 40 million tons short on crop storage
space. Mostly in southern Brazil and Northeast. Once upon a time the Coops told farmers
not to build grain bins, we will take care of you. Now the Mega Coops look like multi-nationals
and do not have the best interest of their patrons in mind. Everybody is steel bin crazy at the moment just like in USA with lack of rail cars. I have been through this before in the early 80´s when we built bins like wind breaks. We over did it. I expect the same will occur at some point again.

Inflation is running at 7% and for those investing in hard assets it makes one feel good.
For those trying to make a living, it is like cancer.

I think inflation is the best drug mankind has ever created. So many get caught up in the illusion.
In the end, inflation gets us all.

Sunday, April 13, 2014

Rains, April, Sugarcane, Econ

For mid- April, the rains have been strong in some spots.

Mato Grosso and Goias have had localized flooding. This will
sure help the 2nd crop corn make it too the finish line.

With 30% of the 2nd crop corn in Mato Grosso planted
after the ideal planting window, May rains will be paramount in order
for the crop to reach its potential.

Sugarcane harvest has started. Many mills will not be opening this
year due to continue financial troubles. Conab released their first
sugarcane crop size forecast this past week. When one looks
at the numbers, one has to ask What drought?
This is obviously the potential estimates for the crop.
With new data in coming months, the sugarcane crop will shrink
down to current estimates put out by various consultants.

The Brazil economy has my attention more so than normal.

Auto manufactures are starting to lay off workers. We have the
police evicting homeless people in Rio. We have inflation above
acceptable levels. We have a REAL that has gotten stronger while
it should be weakening, and Brazilian interest rates are on the increase.
Foreign money is coming in distorting reality and or a safe haven for
Russian dollars looking for a temporary home.

Throw in a national election in October and we have the makings
of a perfect storm - economic and political uncertainty. Add in a few
protests here and there we will have the making of a good movie.



Thursday, April 10, 2014

Conab report and seed consult

At 9 am Conab will be out with their updated grain production report for April.

They are also sending out a new sugarcane report.

I will be sending out a special Conab highlights report to subscribers by 9:30 am Brasilia
time today.

I will then prepare for an afternoon consult today. A research firm from
Washington state is looking at how Brazil soybean seed market functions and
the rate of increase for RRII Intacta technology for 2015 crop year.

I plan to be near Brasilia this weekend.

I will be at Ribeirao Preto Ag show April 29th. I will prepare a May
special edition newsletter from that experience.

Drop me a note for more info.


Sunday, April 6, 2014

Just in time beans

Thinking aloud to myself. I can´t help but chuckle at the scene in New Orleans this week. We have a Brazilian panamax arriving loaded with soy. In the next dock over there is liable to be a ship being loaded from Mississippi barges of soy and on their way to China simply because of CIF booking verses FOB. These same barges could possibly be loaded with soybeans and pushed back up river for crushing in May or June. "Just in time soy" or peak protein continues to get more and more interesting.

Saturday, April 5, 2014

2015 Brazil soybean area

There have been some 2015 Brazil soybean area forecasts in the news this past week.

General consensus is that 29.7-29.8 million ha were planted this past season.

We will also have about 800,000 to 1 million hectares of 2nd crop soybeans
planted for harvest in May and June 2014.

I have talked to several large operators this past week. The business
model is to continue to increase soybean area for 2015.

The idea of another 1 million hectares planted to first crop soybeans
for 2015 is a bit optimistic. Cost of production to grow a crop is still
at record high levels. Only the well capitalized are still expanding.

Parts of MaPiToBa have been whacked with two years of drought.

I think some in those areas will need to lick their wounds for a year or two.

Subscribers to newsletter and flash updates will be the first know.

I am watching fertilizer sales for 2014. This will be the leading indicator
as to how many soybeans get planted at the end of the day.

My personal feeling at this time is more of a stand pat scenario for 2015 and
not one of expansion.

Link to payment sites:

Friday, March 21, 2014

Railroad dreams for Mato Grosso in freehand

4 railroads would be the ideal:,gigantes-do-agronegocio-se-unem-para-investir-nas-novas-ferrovias,1144031,0.htm

Agribusiness giants unite to invest in new railways

 Bunge, Cargill, Dreyfus, Maggi, responsible for 70% of grain exports in the country, form company to dispute the auctions of railways and to propose changes in government railways that will be offered as federal grant
March 23, 2014 

Four agribusiness giants - Bunge, Cargill and Dreyfus Maggi - and structuring business Presences of Light Station (EDLP) intend to join to create a logistics company to participate in the auctions railroad concession. Together, they account for 70% of grain exports from the country

These companies are willing to build and operate new lines in Mato Grosso. The main target of the company, however, is to act as an independent carrier for rail freight. It is a figure that does not exist today in Brazil, but will be created based on the new model for railways proposed by the government.

The plan was informed on Tuesday the Minister of Transport, César Borges. Should be detailed in the coming days to President Dilma Rousseff, who was already informed of the general studies. "The companies are committed to being leaders in the process," said licensed Maggi (PR-MT) Senator.

With the plan of the new company, the group presented a proposal for change Borges lines that will be offered as a federal grant in Mato Grosso. The project, called Pirarara, plans to invest  R$ 10 billion to R$ 15 billion.Pirarara is a fish that can reach 60 kilos and 1.5 meters, found in Rios Amazonas, Tocantins and Araguaia.

Currently, the federal program provides for only one extension in the state, a stretch of Railroad Integration of the Midwest (I am), 883 km, out of Lucas do Rio Verde and following eastward until Campinorte (GO) where it will interconnect with the North-South Railway. From there, follow the load to the sea through the port of Itaqui (MA).

After studying 40,000 routes flow of grain in the country, the group concluded that the ideal would be to shorten the line at 500 km. She would start further east in Agua Boa and end in Campinorte. This small extension is being called "Fico East".

Moreover, two railways would be created. The main fare from central Mato Grosso, Sinop, and follow by 1000 km to the port of Miritituba in Rio Tapajós, Pará.
 There, follow the load for over 1000km of waterway to be exported through the ports to the north, as Vila do Conde and Santarém.

This line, dubbed the Grain Train or Ferrogrão, would the output channel to half the production of soybeans, corn and meal from Mato Grosso, which is expected to reach 50 million tons in 2020. Today, it is 30 million tons. Because of the strategic position Itaituba, which Miritituba is a district already has almost all the big agribusiness.

A third extension would leave the west Sapezal (MT) and follow to Porto Velho (RO), on the shores of Madeira. The path is part of the old studies I am, so it's called "I am the West". From there, the cargo would by river to the Port of Itacoatiara (AM) or to ports of Para

Economy. Maggi explained that the group is not against Fico as is proposed by the government. However, studies have indicated that the best solution is different from what has been analyzed and it was almost a consensus among stakeholders. Great entrepreneur of industry and former governor of Mato Grosso, he pleaded surprised with the findings.

"In relation to the situation we have today, the freight would be cheaper by R$ 40 per ton," said the president of EDLP, Guilherme Quintella. It was up to him, who is chairman for Latin America, International Union of Railways, make such studies. Built three branches, 98% of the production of soybeans, corn and meal of the State would go by rail.

The group asked to open Borges Process Expression of Interest (PMIs) suggested for the three lines. That's the way the government is hiring economic studies and engineering projects, after the virtual monopoly of structuring Brazilian Project (EBP) was asked by the Court of Audit

Saturday, March 15, 2014

March 15 update

Things I am watching:

1. 2nd crop soy area
2. Machinery sales at upcoming ag shows
3. Condition of sugarcane crop as harvest starts
4. Early yield results coming out of Argentina
5. Quantity of Chinese soy cancellations or roll forwards
6. Election potentials for Oct and reshuffle of cabinet. (already started with new Sec of Ag from Mato Grosso)
7. Land values as we start a new season of transactions
8. China economic tremors

Conab gave us a very interesting report this week. I did not expect them to drop 4.6 million tons
in one month. I have been saying since the beginning of the crop year that Brazil had a 93 million ton
potential. With this new info, we are circa 8 million tons dis-counted from the full potential.

As I think back to the 2012 drought, Brazil had a 75 million ton potential and after the drought
we had 68 million tons. A drop of 8 million tons.

Since 2012, Brazil has expanded 2 million hectares for the 2013 crop and another 2 million hectares
for the 2014 crop. The expansion has come from aggressive conversion of pastureland and the switching from 1st crop corn to soybeans.

It seems as though the law of diminishing returns are kicking in for Brazil. One could make the argument for both soy and sugarcane.
Brazil keeps expanding area of each crop, but the amount of gain using national averages keeps getting harder to achieve.

Last year Brazil had a mini drought in Northeast. A few million ton of potential were lost. This year we expand 2 million hectares (5 million acres) and we add 4 million ton to the tally year over year.
We need to clarify that the new lands are not the yield lag. The new lands are doing quite well.
The irony is that the more Brazil expands new areas, the lower the established yields are in the
old "baseline" states. This is a direct influence of unusual weather patterns.

Now we have a situation where farmers are planting a 2nd crop soy instead of corn or cotton.
This is terrible agro-nomics, but it sure helps put a band aid on a "light' first crop. Farmers plant their own seeds again with a nominal cost of production, and in many cases the 2nd crop soy will be the better return than the first!!!!!

The 2nd crop soy is less risky and will make it before a frost comes. The 2nd crop corn is always a crap shoot in the south due to frost and drought in the north.

I wish I has better data from the crop consultancy´s and government agencies when they talk about
total soybean production. When they say 85 mmt, is that first crop only?  Or total tally with
both crop potentials. The area of 2nd crop soy has now grown to such a number that it warrants
a 2nd crop classification in my mind. This is a new world. 2 or 3 million ton ghost tons could hit the balance sheet by May/June. I am not sure how many grasp that?

Same story with sugarcane. The frost and drought 2 and 3 years ago inhibited the sugarcane´s ability to rebound.
Add into the mix 5 and 6 year old stands that needed renovation, the sugarcane industry was
entering into a crisis situation. A new credit plan was announced to help renovate stands. Large multi-nationals that had capital invested heavily into new plantations. It takes 12 to 18 months to see the fruits of these investments. Companies such as Bunge invested heavily in new plantations. 2014 was the year they should be reaping the rewards for their efforts.

What happens?

A serious drought centered smack dab on top of the heart of the sugarcane region of Brazil.

In the season which they should be harvesting 120 tons per hectare, they will now be lucky to
grab 80 or 90 tons for year ONE of the crop cycle. They will harvest the cane later than normal
in order to get more growth. What happens for 2015? Can the stand rebound to full potential?
I do not know.

What I do know is that the grandiose forecasts released by some for sugarcane potential of
1 billion tons by 2020 is not going to happen.

Sugarcane and soy are doing the two- step. Two steps forward and one step back.

More and more money is being thrown at the two crops with diminishing return on the overall
crop size. This bares watching going forward.

We have various ag shows coming up. We have a new Mato Grosso BR163 Safra show at Lucas do Rio Verde, Mato Grosso at the end of March.

We have Rio Verde, Goias Agri show in early April.

We have the granddaddy of Agrishow´s the end of April and early May.
This show is at Ribeirao Preto, Sao Paulo. I plan to be there.

I keep my VIP clients up to date in real time as per the items mentioned above and other
market related happenings.

It has been a dynamic two weeks in the world.

Just when I thought the world was going to be awash in soybeans, we lose 8 million tons.
It is just enough to keep us on the edge of our seats for one more year.

I do not think you need to buckle up for 2014, but make sure your airbag is ready to deploy.

Those Texas dust storms sure look like the stories from 1936. Let us hope that is not our future.
High prices are great, but 25 dollar soybeans would drive us all batty ;>)

Good luck in 2014,



Friday, February 28, 2014

March 1 comments

Much has changed in the world soybean market dynamics the past two weeks.

Early in the SA growing season, I was a proponent of a 92 or 93 million
ton soybean crop for Brazil. I believe at one time this was valid.
The question now is: Do we subtract 5-6 or 7 million ton from the
original potential? The soybean market has been sniffing this out since early February.

The warning signs were all there. Early dryness, Helicoverpa caterpillars, some
Asian rust , etc....

Each item by itself was a non issue. Together combined with late flooding
in Mato Grosso, we came to a point of no return on the size of the Brazil soybean crop.
We had agro-political types shouting in Mato Grosso that the size of the state´s crop
was two million ton under stated. My thinking in mid-February was that if this is true,
we can handle a couple million tons loss in other regions.

Farmer friends of mine in Parana were screaming at me. Kory, you have no idea how
bad the heat and drought is. It is worse than 2012.

As I think back to 2008/09 and 2012 droughts, they both started out dry. Then in late
January the rains came and saved the potential. This drought started mid-season.
The whole country was off to a great start with just a few exceptions. Then in January
and February there were 4 to 6 weeks of scourching heat and no rain in Southern and
Eastern Brazil. This took its toll on coffee and sugar plantations. We need to keep in mind that
a lot of coffee is irrigated.

The reservoir outside of Sao Paulo dropped to 17% of capacity. A record low.

Ten days ago the skies opened up and the rains came. 12 inches of rain came in
central Mato Grosso; i.e.soybean ground zero on the planet.

This caused much hardship with getting the 2nd half of the soybean crop harvested
and 2nd crop corn in the ground.

What now?

In my opinion we have lost from 5 to 7 million tons of soybean potential
throughout Brazil. Many will argue that it is more.

Argentina contacts tell me that crop is at least 53 million tons. The heart of the
soybean triangle will have record yields in Argentina. A triangle drawn from
Rosario to Cordoba and back to Venado Tuerto is some of the most perfect land
on the planet. The bulk of Argentine soy production is there. When the rains came there
in early January, I knew Argentina would be OK. SW Buenos Aires and La Pampa
were nipped hard this year with lack of rain.

This should be simple right?

One adds  87 million tons for Brazil and 53 million for Argentina. End of story correct?

Well, not so fast young sky walker.

Chinese demand is rampant. Many predict 70 million will be imported by China in next 12 months.
Sources tell me that China is stocked up on soybeans at moment and do not need the amount
they have on the books. Who do I believe?

Brazil sources tell me that the final tally of the Brazil soybean crop could be only
80 million tons. If so, we have a new global soybean crisis to deal with. The USA
is soon out of beans and Brazil plans to export 45 million ton and crush 35 million tons?
That is 80 million ton. We run out of cushion.

Everything I have been saying is 1st crop soybeans only.

We now have a robust 2nd crop soybean crop potential to deal with in Brazil.
In the past these production numbers have been 500,000 tons or less.
But, with soy prices begging for more production, we now have more and more
farmers planting a 2nd crop of soybeans. The area could occupy more than 1.5 million
hectares of 2nd crop soybeans in the states of Mato Grosso, Goias, and Parana.
These hectares all come at the expense of a 2nd crop corn.

Will these soybeans yield 2 tons or 3 tons per hectare?

Now we just found a 3 to 4.5 million ton shot in the arm. 87 million tons becomes
90 million tons again. 85 million tons becomes 88 mmt +.

Will Brazil pull off two soybean crops before the USA farmer even plants his next crop?

50 bushel + 40 bushel = 90 bushel per acre by May 2014.

Soybeans at 14 bucks,  why not?

I have outlined all of these potentials to clients over the recent weeks.

I will continue to update subscribers in real time.

For those looking for free info, please do not ask for a newsletter sample
and then disappear. It is extremely shallow on your part.

Thank you for all the loyal subscribers through the years.
It is appreciated.

For now, it is Carnival and Brazil will be quiet the next 5 days as per
news and updates.

Ate mais,


Tuesday, February 4, 2014

Hot and dry concerns

I have received many calls and emails today.

There is a hot/dry pattern stuck in the NE and SE Brazil.

If this pattern lasts another 10 days, I would consider cutting
the size of the Brazil soybean crop a bit.  

At this time, the hot dry weather does not concern me much.
It makes for great harvest weather.

We need to keep in mind that Mato Grosso is understated
when it comes to crop size this year. Mato Grosso can offset
some losses in other locals.

The hot dry scenario affects the following in order of seriousness.

1.  Coffee
2. Sugarcane vegetative growth
3. Late planted soybeans in Parana, SP, MG, and NE(MaPiToBa)
3. Amount of 2nd crop corn planted

If this hot dry spell lasts another 10-14 days in Parana,
this will start to influence how much 2nd crop corn gets planted.
After the 20th of Feb, the frost risk is very high planting after
this date.

Thus, farmers will switch to wheat- if they can- seed supply??

The biggest influence on sales at the moment is the recent rise to
2.45:1 basis US dollar. A soybean rally and a strong dollar is just
what the doctor ordered. Sell and sell some more.................

Conab report will be out on Feb 11. I will send out special report
to subscribers. Let us see how big the crop size potential is
based on January data and then we can make some adjustments
lower due to regional drought spots.

Sunday, January 19, 2014

Jan 20 comments and thoughts Brazil and AR

It has been awhile since I have posted.

It is holiday season in Brazil and people are running from
vacation spot to vacation spot.

I have been making plans to be in USA June and July this year.
We will visit Orlando and drive across the USA visiting family,
clients, and land marks along the way.

I was almost there for Dec and Jan this year.
With the minus 70 degree temps I have seen on the weather
maps in recent weeks, we are thankful that we did not go.

When I was young, I thought nothing of working when it was
minus 30 or minus 40 deg below zero.

I now have 5% Brazilian bio mixed in my blood.
I tend to "Gel" up as temps drop to about 40 deg F now.

I have been sending out almost daily updates to subscribers
as per yield talk, harvest progress, and tidbits about economy
and politics here.

There are many bean counters these days. Everyone seems to
be able to pull a production estimate out of their bum bum while
sitting in an office thousands of miles away. Their powers are
beyond my understanding.......

For the most part the soybean crop is very good.
The yields in Mato Grosso will be record high.

The early yields in western Parana have been a bit light.
Drought stress in December.

SW Goias looks to be losing about 1 million tons because
of drought.

Other areas are getting decent rains.

The news items about bugs, worms and Asian rust are all
non sense these days. Much to do about nothing.

This is not to say that they don´t exist, but at the end of the day
a farmers spends some money and the professional agronomists
get out their life sabers and deal with the dark side. I never doubt
a farmers ability to spray and the agronomists ability to find problems
to spray for.

Monsanto´s RRII Intacta seed is doing very well repelling the dark side
critters. Intacta will be planted in high volumes in 2015.

The week ahead looks rainy which will delay harvest a bit.

For the time being all seems calm and under control in Brazil.

My attention is on Argentina. With the dollar at 12:1 there and talk of
limiting certain items for sale in the super markets, I cannot help but think
that Argentina´s  economic and political days are numbered.

How this unfolds will likely affect strikes, soybean sales, soy crush,
energy, and ability of the market to nail down supplies of wheat,
soy and corn in coming months.

World Cup games start June 12th.

Brazil elections in Oct.

Last night I went to the "Wolf of Wallstreet". God I love that film.

It was a wild ride.

I sense Argentina might be in for something similar in coming months.