Friday, May 1, 2015

May 1 update

April rains have gone a long way to making the 2nd crop corn. The 2nd crop is going to
be much better than I originally thought. The center-west part of Brazil has received
late season rains four years in a row. Given the late planting, this is very fortunate.

Conab will be out with another report May 12th, let us see what they do with the
corn and soybean numbers. I am thinking a small down tick in soybean number
and increase in corn number.

Funding for Brazil infrastructure projects are on hold. This is frustrating to those
waiting for years for roads and railroads to be completed.

This past week was the big Agri-show in Ribeirao Preto, SP. Equipment manufacturers
have had a difficult 1st quarter of 2015. Sales have been slow.

Most expect the 2nd half to better.

I think this will depend on how corn and soybean prices continue downward or
stablize in this area.

If corn is trading low 3 dollars and soybeans break into the 8´s, then I think 2nd
half of 2015 will be equally as weak as the 1st half.

Fertilizer sales have been a good leading indicator for the coming year´s soybean
expansion rate. Last year fertilizer grew by 5% and area grew by 5%.

As of the first quarter of 2015, the fertilizer sales rate is 5% below that of last year.
Many blame the lack of agricultural credit for this. The new plan is said to be announced
by May 19th.

I think with the strong dollar weak real relationship; soybeans remain the only game in
town as per planting for 2016.

I do not think we will see a decline in planted area in Brazil for soybeans, but I think the
era of 5%+ per year expansion has run its course. I think we platueau in this area of
31.5 million hectares and see where soybeans bottom out assuming a 4 billion bushel
USA crop for 2015.

I will update as I know more via my newsletter and VIP flash updates.

Drop me a note if interested.