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.

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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.

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