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.