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: