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.