Saturday, November 7, 2015

Nov 7 blog Where is the rain?

It just can´t seem to rain like normal. We had some nice showers last weekend. Then it turned dry again.

I am headed to Mato Grosso this week. We have a tale of two worlds again. We talked about this last year but the rains started Oct 22 and continued normally. This year we have soybeans that are soon 45 days old and look good. We have soybeans that are 25 days old and need to replanted. We have vast areas not planted yet. Specifically Goias and the NE 1/4 of Brazil. Planting now will be considered late in these regions.

I am waiting for November 15th before I start to call this soy crop smaller than what is in the media today. There is still a chance things can correct and we have a late planted record soy crop and a very at risk 2nd crop corn. With Mato Grosso receiving above normal rainfall the past FIVE 2nd crop growing seasons, our memories tend to get short sided and we forget what "Can happen".

Brazil is pumping out all this extra corn at a record pace. 28.8 million tons for Nov 1, 2014- Oct 31 2015. Some say that for calender 2015, Brazil corn exports will be above 30 mmt.

Petrobras workers have been on stike this past week. Interupted total oil production for the week is about 800,000 barrels. Not a big deal on the global oil market, but needs to be watched if this continues a week or two- moreso for Brasil domestic energy markets.

Truckers plan to strike again on Monday. Let us see if they can make something stick this time.
It seems to take about 2 weeks for shortages to start showing up in the supply chain of various products.
With enough of these disruptions, this will eventually bring government to thier knees. There will not be enough fire trucks to keep all the fires out.

Currency market has been controlled again in recent weeks. Central bank is crapping in their pants that USA raises interest rates in December. It puts the Brazilian Real in a no win scenario. They cant keep ahead of inflation and budget concerns.

More movement this past week on the proposed rail project for Northern Mato Grosso up to the Amazon river system and then barge soy, corn, and meal further up the Amazon for loading of Panamax ships.
This would be a boon for the region. I still have my doubts as per the short term practicality of such projects given that government can´t even pay contractors for work that has been done on other roads and rail roads this year. If the multi-national grain companies and China could get together and float this project without Brazilian government intervention, this thing could have legs in the next year or two.
But as we have seen, when has Brazilian government ever not obstructed progress? They don´t even have the statesmanship to resign when clearly they are not working in the publics best interest.

Bottom line to all of this:

I am not sounding the alarm bells quite yet. With current weather patterns, I will sound the yellow alert after Nov 15th. Soy production will be at risk and 2nd crop corn at great risk. At the moment Parana is the "Garden of Eden" and well on the way of producing 18 mmt alone. Will Mato Grosso come in at 29 mmt as per expectations? and 20 mmt of 2nd crop corn? With this pattern we have today- no way-
If it rains cats and dogs Nov 15th- Jan 15th, we still have a chance on seeing Mato Grosso blow us away with yet another record, but my antennae is up!!!!


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