Saturday, December 17, 2016

Optimism in the air

As one walks around the shopping malls and watches how
consumers are acting this holiday season, optimism is not
a word that comes to mind.

I was recently was told that this is the slowest Christmas sales
season in four years. That kinda makes sense since the Brazilian
economy has shrunk 10% in the last three years alone.

There are too many stores closed or for rent these days along the
major avenues in Goiania. It is going to take some time to
swing this ship around away from the headwinds and sail
downwind again.

The optimism I speak of comes from the ag sector in general.

With this massive soybean crop on deck, that will help stop
the bleeding in the economy and probably give us small
positive numbers.

It is about time.

The problem with that is that we are talking about a soybean based
recovery. Not an information technology recovery, a demand based
consumer recovery or a faith in the governmental system type of

This recovery will be based on fairly good soybean prices, fantastic
yeilds, and Chinese demand for protein.

This was turbo-charged last month by Trumps election win.
China wants to hedge herself and combined with a weakening
Yuan, that bodes well for South America short term and probably
long term.

The kicker is: is this really the best way to run an economy?

Soybeans, great weather, and an X factor defacto "good luck" from the
election of Trump by pulling a straight soybean flush by drawing the
Queen of Soybeans on the "River Card".

There is Optimism in the Air in Mato Grosso and other soybean states.
We are not going to believe some of the soybean yields this year.

This optimism will start to be felt in machinery sales, parts sales, demand for
labor, fuel, seed and fertilizer.
I am already hearing of pent up demand for Urea for 2nd crop corn.

The ag sector is about to help Brazil stop shrinking. New honest dollars
are being created everyday. Sun, rain, and investment in themselves i.e. land
will help turn the corner.

Politicians need to recognize this and get on their knees and thank the
Brazilian farmer for sticking with the profession even though it has looked
bleak at times. Government needs to get out of the way of the productive sector.
Let the private and/or international financing of projects happen.

Brazil increased fertilizer sales 11% from last year. When one thinks of the
drought hit areas and lack of credit or damn expensive credit, this means
the farmer invested in himself one more time risking it all in some situations
that it would get better. Of course, record high soybean prices in June 2016
in Reals helped make that decision easier.

The cost of a few things are going down. A new crop of fruits and vegetables
are coming to market. The price of some products like rice and edible beans are
now cheaper than a couple months ago. Food inflation is less of an issue today.
Energy and LP gas bills are still high. Apartment prices are coming down.
The real estate market is stalled throughout the country.

Sugar and ethanol look like money makers in 2017. But it seems like most mills
have been shut down in recent years or in bankruptcy. It is time for a new cycle
to begin.

Brazil loves its 7 year cycles of boom and bust. A few years ago when Brazil
was at the top and could do no wrong, she thought she was immune to her
volatile past.

A few years ago, Rio de Janeiro was arguing about how to divide up all
the money from oil royalties. Today Rio cannot pay her public servants on time?
Whatever happened to all that oil money? The government through tax incentives
tried to stimulate oil and quash inflation. By doing so, they brought the sugarcane
industry to her knees. Today they want to stimulate cane and other
bio fuels again. For the next 5-7 years, bio fuels look like the place to be in Brazil.

There are "green shoots" on the horizon for Brazil in 2017. It is better than
nothing. It will be soybean i.e. AG driven recovery. This recovery can be
as fickle or "flush" as the whims of FX and CME will allow.

No blinds, No limits, Brazilian Hold´em 2017 has begun.

all in ?

Merry Christmas


Sunday, November 27, 2016

Nov 27 blog update MT and Goias trip

I see the previous blog post was very popular.
circa 2000 views

I was in MT last week. Not much more to say than what I put in
Nov part II newsletter. The crop is big. Lack of corn seed for
2nd crop is an issue going into 2017. Expect record area of planted

Dollar has rebounded back to 3.47. Soybeans continue to rally.
Life is good.

I will be in southern Goias this next week.

In have received photos out of Rio Verde, Goias. Ditto.
Soybeans are the darkest green ever.

Fertilizer shipments until October are 8% over last years pace.
This all bodes well for productivity.

Corn ethanol mill constuction in Lucas do Rio Verde is making
fantastic progress. Looks to be up and running by June 2017.

Chinese keep buying more businesses in Brazil.

I will include some photos I took from airplane near Sorriso, MT.
I think the photos tell the story.

Friday, November 11, 2016

Nov 11 The week the world changed

As recently as last week I was reading economic reports from
various banks and they were lowering their dollar:real forecast for
2017. They were thinking 3.15 was the new norm. We are long the Real
they said. From experience, these longer term FX forecasts never work
out as planned in Brazil.

On Tuesday, the dollar was 3.17. Everyone knew Hillary was going to
be the next President.

In two days, the dollar touched 3.50 and settled the week 3.40:1.
I had just written a couple quarterly reports for Brazil investors and
I forecasted that I thought the REAL would drop back closer to
3.50 for the 2017 season. This was based on rising interest rates
in USA and declining rates in Brazil. I never dreamt the forecast
would come true in a few days.

Trump shook the developing world to its knees. Wednesday it seemed
like everyone was in shock. It took until Thursday for the globe to
figure out what does this all mean?

Major global banks were caught on wrong side of FX trades. Position
liquidation fueled the moves.

In addition the the northern hemisphere drama, Brazil was creating a new
one for herself. Someone found a bribe check for R$ 1 million
made out to President Temer for a project. Maybe, he will be impeached?

All of this came at a perfect time for the Brazil farmer. We have 10 dollar
soy in Chi-town and a weaking FX. All this after they bought inputs at
3.20:1 is what doctor ordered going into a whopper bean harvest.

It sounds like Trump is serious about bringing home circa 2 trillion
dollars trapped in other countries. I think smaller developing countries
sense a massive sucking sound of dollars leaving their banking systems
in 2017. Cayman Islands, Mexico, Hong Kong, Ireland to name a few.

If and when all these dollars come home, they will be looking for a new home.
I think the next two to three years will be inflationary beyond our wildest dreams.
I think all of those things that Jim Rogers was touting back in 2008/2009 during
the crisis and stimulus packages are now going to come true.

Inflation is the best drug man ever created. The artifical sense of wealth
and prosperity. More than likely debt driven, it will lead us to even a greater

These dollars are finding their way into commodities again. Even if some
commodities are not bullish per se, they are receiving the liquidity and
giving us wild moves when there seems to be no fundamentals to justify it.

China has been sniffing this out for months. China does not want to deal
with a USA that is bi-polar. They cannot risk a trade war and free
flow of food.

China has been buying Brazil and Argentina. This is the biggest fundamental
change in global agriculture taking place right now.

They are buying ports. They are buying soy and corn warehouses. They
are buying majority stakes in grain trading companies in Mato Grosso.
They are buying sugarcane mills in Sao Paulo state. This past week
Brazil and China formed a R$ 1 billion Real infrastucture developement
fund to help get projects off the ground in Brazil. Railroad concessions are
first and foremost on their list for 2017.

China is hedging her food sourcing options away from an unstable USA
environment in the future. I am not predicting a trade war or embargo
type scenario, but China is making damn sure she is not caught with her
panties off in case someone gets cute.

This is super bullish for South America in the coming years. I hope Brazil can
keep herself on the recovery path and not fall off the bar stool again.
Temer and company have a long way to go and a short time to get there.

I will be in Mato Grosso the next week or so. I am hearing that early soybeans
could be ready by December 15th.

If the Amazon rains do not hit during peak soy harvest in late Janaury and
early February, Mato Grosso could have 5 million hectares of soybeans harvested
of her 9.2 million hectares by Feb 15th. This is like a really big deal dude.
This eludes to a massive 2nd crop planted area during the ideal window.
Keep an eye on this.

Looking at politics: During Obama´s first two years, he placed all his chips
on Obamacare. In hindsight, he maybe should have done things differently.

Trump has two years. Let us give him a chance. I realize the vote was more of
a FU to Washington DC. They needed it.
The worry I have coming from an ag background that has needed so many subsidies
in the 80´s and 90´s to survive via govt payments, crop insurance, CRP, disaster
payments, and emergency ag loans, that I fear that sometime in the future when we
least expect it and we need help the most, we will get the same vote back to us in rural
America. FU2 will be the response to our plea for help.

I think we need to be ready for that sometime in the future.

The game has changed. The rules have changed.


Saturday, October 15, 2016

Brazil China relationship status *updated*

São Paulo, 10/13/2016 - The Chinese trading Cofco Agri acquired two warehouses in Mato Grosso, according to a statement by the company. One of them has a capacity of 72,000 tons and is located in Itanhangá; the other can receive up to 60 thousand tons of grain and is in the Novo Mundo. Cofco Agri also purchased land to build a new warehouse in the city of Marcelândia, which will house a warehouse with 70 thousand tons. This warehouse will receive the 2nd crop corn harvest next year. The company did not report the value of the investment. Subsidiary of COFCO International, Cofco Agri operates in trading and agricultural processing products originating in various regions such as South America, South Africa, Eastern Europe, India and Australia. It also operates in the supply regions with high demand, such as Asia and the Middle East. Last August 23, the International Cofco announced the acquisition of 100% of Nidera.

Northern Mato Grosso is the focus area.


Thursday, October 13, 2016

Brazil China relationship status

The past 6 or 7 years Brazil and China have been doing a lot
of dating.

A Chinese delegation arrives and does a tour. A couple months later
a Brazil delegation makes a visit to China.

Many headlines have been made. Many letters of intention have been
signed by countless politicians and businessmen from both countries
with regards to ag and trade.

Time goes by, not much has changed.

This past year we have had a couple of equity deals done with
Ag business in Brazil and the Chinese.

It seems like we have moved into the "let´s live together awhile and
see how it goes" phase of the relatonship.

If it does not work out, it is still simple to go our separate ways.

Much talk lately of a Brazil/China fund to finance projects.
This catches my ear, but until I see something, all it is is a headline.

If we hear that China is going to help fund one of the railroad projects that
never seem to break ground, I will have to amend the relationship status
to "We are now engaged". No wedding date has been set yet.

If sometime in the next couple years we actually have the Chinese "laying some track",
I will have to say we have a wedding date in mind.

When I see Choo-choo trains zipping back and forth to Amazon hauling beans,
I will say Brazil and China are now married.

Until death do you part ;>)

This is all a ways off but I am getting query´s about this and I need to
act like a daddy here and make sure you love my daughter first.

You only get access to the soybeans after you marry her.

In this case, the daughter is Mato Grosso.

The wedding invitation has not been mailed yet.


Saturday, September 17, 2016

Sept 17th blog update China visits

Hot and dry at the moment.

Forecast is for rains to start end of Sept. The 30 day forecast
is for irregular rains. We will need to watch this as per if this
affects planting. At this time, not a big deal.

I am working on Oct newsletter. I have some new corn production
graphics to include. As I stated earlier, the headline for the season
will be the amount of 1st crop corn that gets planted and the lack of soybeans.
Soybean area will look very much like last year.

The impeachment process went smoothly and now it looks like they will nab
former President Lula also. Compared to USA politics at the moment, Brazil
looks rational at the present time.

Brazil sure seems to want to open itself up for investment again.
Foreign ownership of land and many infrastructure projects are all on deck
to be bid on by private sector.

President Temer and Sec of AG, Blario Maggi, have spent time in China the
past two weeks. Blario continued onto Vietnam also.

We have had Chinese delegations in Mato Grosso, Tocantins, and Goias recently.

One must wonder why?

It seems like Brazil is serious this time about letting foreigners participate
in infrastructure ptojects. They are printing the consessions to be bid on both in
English and Portuguese. In the past, so many things i.e. details, got lost in translation.
It does no good to bid on a railroad if the environmental impact study has not been

President Temer and Blario Maggi remind me of the Smokey and the Bandit theme song,
"we have a long way to go and a short time to get there."

They have two years, maybe less, when one considers the election politics of Brazil
for 2018. They need to make hay in 2017 or we will look back in 2.5 years and say they
were nothing but place holders or bench warmers for the new team to come in early 2019.

This new team will be a wild card. We could swing hard left or hard right again depending
on the economic temperment of the populous at that time. At the moment, most everyone
is hurting. Sales, production, and services are much lower than three years ago and at the
same time everything costs more. My electricty bill made a new record high for Sept.
10 years ago the bill was 150 and now it is 800. I am not sure how the average joe
can keep up with that.

There are reasons to be optimistic. But so much of this optimism depends on China, FX,
and cheaper credit in the future. If there is a hiccup in any of these factors mentioned,
it ripples through the whole economy and another year goes by without much change.


Sunday, August 14, 2016

Screenshot of April newsletter 1st corn area etc

Here is a screenshot from the April newsletter looking at the potential for acreage shift for 2017.

I am monitoring this.

Starting Sept 1, I will be adjusting my hourly and VIP rates higher.
10%-20% increases.

Anybody interested should drop me a note ahead of this and we will work something out.

Corn has started to be planted in RGDS and soon SC and Parana states.

Thursday, July 28, 2016

July 28th blog post

A brief blog post for early August.

I am in disagreement with those who think we can see an expansion of soy area
in Brazil for 2017.

It is more of a gut feeling I have lately. I am looking at domestic corn market,
(at near record highs),lack of credit/or very expensive credit, re-negotiations of contracts,
(land rent,physical delivery contracts, etc),trucks standing waiting to load
corn(lack of supplies), packers slowing down slaughter pace, crushers shutting down early etc.

And weather ......

I am expecting a late start to Cerrado states planting. If this is the case,
later planted areas, i.e. sandy areas, will likley to switch to corn.
1 crop only

Southern Brazil farmers have the economic incentive to flip to corn.

If its only 500,000 ha, Brazil will likley stand pat on soybean area
for 2017. Potential is there for decent crop and good yields.

If for some reason, the switch starts to look closer to 1 million ha from
soy to corn for 2017, expansion will not outrun switching and on a net net basis
Brazil will drop in overall soybean area.

This is not in the main stream.

I have outlined this in recent newsletters and special sendouts.

This is the "sense" I am getting today.

Better to do 1 crop correctly on the right ground than try and push
two crops and get burned on both.


Saturday, July 2, 2016

July 1, 2016 blog

Dollar has traded 3.20:1
Soybeans have traded R$ 85.00/sac in Sorriso, MT
Corn has traded at record highs but market has now calmed
Edible beans are at record highs
Credit is tight, but multi-nationals are filling the void
Beans and corn are moving north to Amazon
Panama canal can now handle 100,000 ton ships of soy to China
Northern Hemisphere has record low interest rates while Brazil maintains 14.25% and
still can´t nip inflation in the bud.

If you would have asked me in February or early March where to Dollar:Real would be today,
I would have said 4.25:1. With the cost of living and utilities on the rise, dollar at 3.20:1
just does not seem possible. The only positive for this scenario is that a stronger Real tends to
hint at higher than average soy prices going forward.

In mid June, spot soybeans made a high at R$ 85.00/sac in Sorriso, MT. Recently they have
dropped to R$ 77.00 sac. New crop bids are in the mid-60´s per sac for March 2017.

Spot corn prices have dropped back to R$ 26.00/sac in Mato Grosso. New crop 2017 contracts
are being written for about R$ 21.00/sac.

Much talk lately of a few big farms in bankruptcy protection. This is more of a cashflow
problem than and overall debt problem. With the stronger Real and decent cashflows for 2017,
the situation is workable. With soybeans at or near US$ 12.00/bu, this is a lifeline
for many. If soy was 9 bucks today and sinking, I might be a little more negative.
For now, I remain optimistic.

The underlying problem for Mato Grosso and MaPiToBa regions are sandy areas that have
been brought into production in recent years. Anyone with sandy land last year,
that missed a rain, felt the lose in yield potential in soy and corn.

We can compare breaking up new lands and pasture to that of CRP in USA. The land has been lying
idle for 10-15 years. It needs heavy dose of fertilizers and lime.
It takes time for the nutrient saturation to build up in the soil profile.
Acidic soils cause aluminum toxicity. The more the
roots go searching for water; the plants literally grow themselves to death.
This is what happened last year in the drought areas. Satellite images
were showing green vegetation, but the plants were dying not only from lack of water,
but of toxicity. Soybean plants were experiencing their
own form of a sub-prime housing meltdown.
The plants formed pods but there was no one living inside them.
The insects came, ripped out the plumbling, and left. A negative feedback loop started.
The farmer saw his crop deteriorating by the day, so why spend more money on a dying crop?
The probability for disaster became a reality with or without rains.
The stage was set for lower and lower yield potentials very early on in my opinion.
A non- plant scientist missed that factor.
They assumed when rains came, all was peachy, and in many cases, it did not matter.
The plumbing was already at the junk yard and insects were at the beach having a Corona
talking about what a good year it was. "I have never had so much insect sex in all my life."
"I have laid more eggs than my grandparents could ever imagine." They would be proud of me.
Whenever I came to an Intacta soybean plant, I jammed my eggs in there but good.
I have faith in my children. My kids are going to be BT resistant is no time.
The first few might be a little bit retarded, but I know they will grow out of it.
Bring me another Corona.
Cheers Mate !!!!

When breaking up new land from degraded pasture, the operator will invest heavily the 1st year.
Likely little or no rent will be paid. Year two, he will pay 3 or 4 sacs of soybeans.
By year 3 or 4, the land owner wants his 8 or 10 sacs of soybeans for rent.

This is the time frame we are coming into for many of the new surge areas that have brought
us to the 100 million ton soy crop potential threshold. Can we break through it in 2017 is the question?
In a perfect world, yes. But

Many operators are threatening to give back the land they have recently brought into production.
They cannot afford a 8 or 10 sac rental payment for 2017. They are trying to keep thier costs
under control after accumulating lots of bills the last two seasons.

I think the land will be planted by someone. It will not be abandoned. There is too much potential
for 2017 to make money. Or in some cases make it all back. "All in on Black 17"

Fertilizer is cheaper and sales are zipping right along. We have the new issue of no planting of
a 2nd crop or anycrop crop of soybeans beyond Dec 31, 2016 in several major soy states.
With cash corn prices firm, a few may try to invert their planting and plant either edible beans
or corn 1st and then get that 2nd crop of soy planted by New Years. Basically that 1st corn and
soybeans will be counted as a first crop by Conab. If this would gain momentum, it makes for
wide swings in planted area estimates from beginning of season to end of season in 2017. I am
on top of it.

IMEA recently published that up to 34% of the January-May soybean shipments are now going
North to Amazon. This is an impressive paradigm shift. Add in the opening of the Panama canal
to 100,000 ton boats of 3.7 million bushel of soybeans per load, damn, the world is changing!!!!!
Good thing the Amazon is deep and wide !!!

The biggest risk factor in coming months is the FX. The Dollar:Real at 3.20:1 does not seem right.
Brazil needs a 3.50:1 or weaker currency to export her way out of this recession. At sub 3:1,
Brazil loses all her perceived competitive advantage on exports of many different commodities and

The Olympics are on deck. It seems to me it will be a flop.

Zika concerns have gone quiet. I would not let this be a sole reason for not coming down.

Impeachment process seems to be moving forward, but expect some legal positioning and appeals
to Supreme Court in August to try and gain pole position by one side or the other.

Dilma says she is open to new elections to avoid this lack of leadership vacuum. If only there
was less EGO one year ago, the public would have accepted this offer. Today, the middle finger
goes up.

When she donated 650 tons of edible beans to Cuba at the end of 2015, and today, we have
pinto beans trading at a record high price. Even the poor folk shake their heads.
She is an economist?
It has not rained in months, and she giving away our staples. Public is pissed off and distraught.

Foreign ownership of land issue is stalled in Congress. The new President, Admin, and Minister
of Ag are all in favor of defining the rules for foreign funded Brazil company to function and
new increased limits. Some say as high as 100,000 ha per entity. I think we will get it.
But it takes time.

I know there is much interest in Brazil ag info in various sectors. I see the number of readers
of my blog and posts in the thousands. There are other sites out there doing the daily ag news in
English. As we start a new crop year in Brazil, I will be doing less blog posts and focus on my
subscribers and VIP clients and my own portfolio. I am happy to offer guidance where I can to
those really interested in understanding Brazil.

I have clients who have just renewed for thier 12th year with me. I am truly appreciative.

I will post the bubblegum of a soybean planter or combine working in a big field as I receive
them from time to time on Brazilintl Facebook page. If that is all you need. enjoy.

But for analysis on what this all means and where we are going, do not look for that
on the blog. That will be for the subscribers.

You know where to find me,

Have a great weekend and summer.

* Early 1st crop corn will attempt to be planted in certain locals as
early as August in Brazil. hint hint


Thursday, May 26, 2016

Mid Year Turn

Seems like many things are flipping polarity from what we have become accustomed to
in recent months.

For months we heard the SA soy and corn crops would be big.
In the end they got smaller and continue to do so.

El-Nino is now offically neutral and flipping to La-Nina later in 2016.
This means SA weather will be 180 deg opposite last year´s experience.

Soybeans are trading 11 dollars in Chicago. Soybeans are trading at a
record high price in Brazilian Reals of $91.00/sac.
2017 prices are much the same. These prices in Reais are higher than
when soy was trading US$ 18.00 in Chicago Sept 2012.

Fertilizer sales are outpacing last year´s volumes. Lower FX
is pulling sales forward.

We have a new interim President. Everyone said that after Dilma
is gone, the Dollar:Real would trade 3.30:1. Yet today the
FX is closer to 3.60:1

Dilma said opposition was fabricating numbers saying the economy
was worse than it is was and using this as a reason to start the
impeachment process. Dilma is an economist. To the chagrin of many,
the budget deficit projected prior to impeachment was too small.
The number has jumped from R$ 100B to R$ 170B after the impeachment
votes. More and more money is needed just to maintain par muchless
come up with stimulus $$$.

We have chickens dying from starvation in Santa Catarina. We have
chicken packers shutting down in Parana May 31. Many coops are
90 days late paying their producers.

We have Brasil JBS wanting to domecile themselves in Ireland to have
cheaper access to credit. JBS made billions on their currency hedges
in 2015. Processing anything seems almost a secondary business now.

The new administration is looking favorably at overturning the limit
on foreign land ownership.

China has made some initial purchases in Brazil Agri-business,
and I would bet that is just the beginning.

The rains shut off on April 13th this year. Those who pushed the
envelope and planted 2nd corn into March 5th-10th like the previous
five years, now have corn of the cobless variety. Zero

This was forecast by many in late 2015. But with corn contracts at
R$ 18-R$ 19/sac and a short soybean crop, the will to keep planting something
to make up for losses overrode reason.

2nd crop cotton losses will be 30% on a widespread basis.

The current 2 dollar+ rally in soybeans has come at the right time
to help producers who took it in the shorts this year. They have some
positive cashflows to work with to deal with creditors and bankers
for the year ahead.

For the last 6-12 months in Brazil, it has been nebulous to try
and see the future. There were so many possible scenarios that
if one event happened it would unleash one set of events. If another
event happened, the end result would be 180 deg opposite the other possibility.
It has been frustrating.

But as we make the mid year turn, I feel like I see the sun is starting to
peak through the clouds as the fog slowly lifts. There are still many
things that can happen to drop the veil over us and keep us lost in the fog.
However, given the rise in prices, announcement of govt ag funding plan,
stable FX, and generally a peaceful transition of power, I think we
can start to be more optimistic as we go into fall.

Many will argue that I am 6 months to 1 year too early on this.
I may very well be.

But specifically the ag sector, we can see tremendous possibilites for
profit in 2017 with decent weather and production.

Sugarcane and coffee are good. Edible beans are at record high prices.
Soy and corn are at record high prices.

Barring any sudden changes in govt, riots, and FX moves, I think we can
start to see the Ag economy on a nice upturn that will seep into the
industrial sector and give us some positive GDP and growth again in Brazil.

I hope the govt does not start to tax soybeans either at a state level in
Mato Grosso or nationally as per an export tax. Both have been proposed
but so far do not have legs. If they start to tax the one sector that
can get them out of this mess, I may have to modify my optimism.

I believe we are in the mid-curve turn in Brazil. G forces are kicking in
and we know we are about to change direction. Let us hope we don´t hit the wall
as we pull out on the straightaway.

Thank you for all the renewals of late.
Thank you for your confidence.

For more info visit

or drop me a note at

Friday, May 6, 2016

Politics, weather, 2nd crop corn, China, Maggi, and look ahead to 2017

There has been much in the news lately. Many things have been spun
as a positive development, but if one looks at bigger picture,
it is a sign of the times and in many cases a "House of Cards."

The vote in the Senate to remove President Dilma while the impeachment
trial starts will happen on May 11th. At this time, it looks like she
will step down for a bit. She could call for new elections and interrupt
this process, but she remains defiant.

Today, the Supreme Court ruled that the Speaker of the House step down
on corruption charges. He hid a few million in Switzerland. We have known
about this since late 2015. One must ask why this ruling came after the
impeachment vote in the House three weeks ago. Would the vote have been
different three weeks ago if he was charged prior?

We have news tonight that Senator Blario Maggi might be the new
Secretary of AG if Temer, the Vice President, assumes office next

All of this is happening while the Olympic flame is making its rounds
through Goias state and Brazil in the coming weeks. People are standing in
line waiting for H1N1 vaccine to show up and yet the Olympic facade progresses.
I talk to business owners and they tell me their traffic is down 50% and their
costs are up 30% in recent months. Rent, water, energy, taxes, gas, labor
are all higher. Many are fit to be tied.

Farmers in Goias state are extremely worried. It has not rained in over a month.
It looks like dry season has kicked in. Brazil weather guy says no rain in the
Cerrado until into October. When it does start to rain, it will rain steady.

Ranchers are already liquidating cattle herds. What will it be by September?
Dead pastrure, fires, lack of water are all very much on deck in coming months.
Chickens are coming to slaughter light. All a sign of lack of feed.
Corn prices are at record high prices in domestic currency. Soybeans are
at or near their record highs.

If one reads the headlines this week in Brazil, one would assume the
2nd crop corn is 50% gone. This is not the case on a national basis.
But in some states like Goias, Eastern Mato Grosso, Minas Gerais,
parts of Mato Grosso do Sul , Sao Paulo and Northern part of Parana,
this is very much the case. 50% shot.

Much of this corn is pre-booked for export. Many of these orders
need to be canceled and originate from USA. The kicker is much of
Brazil corn goes to Middle East. Will Iran want corn from the
Infidel´s? Not sure..... If I were Muslim, I would buy all the corn
I could before the Trumper says I can´t have any.

This dovetails into the Chinese purchase of a Mato Grosso grain
merchandiser. Is it as simple as opportunity presented itself and
a willing buyer found a willing seller? or is there more to it?
Yes, the grain merchandiser is going through a restructuring.
Yes, the Chinese have tried for years to buy land, build soy
crushers, railroads, ethanol mills, and buy soy direct. All efforts
have failed. They could not find a dance parter. Now they have access
to direct soy, port access, and in the future- rail service.
I cannot help but think that Trumps recent rise to top of Republican
ticket has sped up their decision to enter the Brazilian and Argentine
markets with gusto. They need access to protein in the future irregardless
of trade issues with USA. There are too many unknowns in the new political
environment we live in. It is time to hedge some bets and put our money
where are mouths are- quite literally. The new China/Brazilian/Gaucho
marriage will be interesting to watch. The Chinese do not like Polka
and Gaucho´s don´t eat Chinese. However, in my own experience, I have found
that a 1/3 Japanese/ 1/3 Italian/ 1/3 Brazilian female to be near
"Perfection". Trumper would approve

Where is all this going?

IMEA earlier in the week threw me and many others a curve ball.
They have been using satellite imagry to measure corn area in
Mato Grosso. They found an extra 500,000 hectares producing
an extra 6 million tons of corn from "last year´s crop".
They then added another 200,000 ha to the 2016 crop.
This is a 700,000 hectare swing from year to year from
what we thought the state´s baseline was.
With the two years combined, they "found" an extra 9 million
tons of corn even with the drought conditions to date !!!!

If we look back to last year´s record exports, we can kinda start
to believe that this data is on the right track.
With domestic consumption+ last year´s exports = more than
the country produced last year.

So thus, yes, Mato Grosso must have produced more corn in 2015
than we previously thought possible. Was it 26 million tons?
Do we really start subtracting from 26 million tons for the
2016 crop that is shrinking each day?

The kicker with this new data is that it cuts both ways.
Let us assume Mato Grosso did plant 4.2 million ha of
2nd crop corn for 2016. Let us assume an average yield
of 5.5 tons/ha. This = 23 mmt.
Last year the avg yield was 6.5 mmt. Thank you GMO technology !!!

But, the more area we plant, that means even more hectares were
planted outside the ideal planting window which is said to be as high
as 25% of the area. 1 million ha could yield zero.
1 million X 5.5 = 5.5 million cut from which number?
26 or 23 mmt?

Before this analysis came out, we were using 3.5 M ha and 5.5 tons/ha
for a 19.5 mmt crop. This seemed reasonable to me.
Take 20% off for drought and we stabilize at 16 mmt +/-.

But now if we take 5.5 million off of a 26 mmt potential,
we still have a 20 mmt crop as if there was no drought at all!!!!!

Mato Grosso befuddles me with corn. When 700,000 ghost hectares
are "just found" and yields always tend to come in higher than
expected, one must just sit back and watch the show here.
Soybeans are much easier to estimate than corn- assuming you have good data.

For the nation, I an a believer in the sub- 50 mmt club. It is bad.
But in the future, we will need to be ready for 30 mmt MT corn crop and
60+ mmt national 2nd corn crop as the new norms.

However you slice things going into fall of 2016, it looks like
Brazil corn price will remain above historic avg.
In the May newsletter I outlined where the acreage switch
has come from in recent years from 1st corn to soy.

Many assume that all expansion in recent years from 24 M ha to 33 M ha
has come from Brazil expanding in new areas. This is simply
not true.

I believe that in the last two years, Brazil has, in essence,
"blown her wad" on soybean area expansion.

1. no more 2nd crop soy i.e. late planted soy soy/soy for 2017- illegal
2. switch from soy to 1st crop corn up to 2 million ha
(am I predicting this today?- no- but potential exists)
3. Many big farms are in bankruptcy or in a restructuring phase
4. Many medium sized farms only harvested 35-40 bu/acre soy this past year.
(they made no money)
5. MaPiToBa region just harvested their 4th drought crop in a row
(This one was the worst) major losses and bleeding taking place
(Farmers in MaPiToBa and Mato Grosso will be hesitant to plant more sandy areas into soy)
6. Higher interest rates
7. uncertain political future and FX stability- in the end all speculation
8. Livestock sector in need of huge volumes of corn to stabilize the domestic market.
9. Soy high cost of production, but likely to be a bit cheaper than last season.
(Fertilizer has helped cut costs lately)
10. Mato Grosso and Para rate of increase cannot out pace the other switching
11. lack of quality soybean seed in Southern Brazil- too much rain at harvest-
(incentivizes switch to 1st crop corn)

I will be watching this in coming months.

Much of this will be determined by the USA crop.
Can we trade 4.25 corn?
Can we trade US$ 11.00 soy
If late start to Brazil planting in Oct, how does this change things?
If we flip to La-Nina- Southern Brazil and ARG flip to drought.
Ideal conditions for Cerrado
Does China really need 84 mmt tons?

What if Brazil soy crop drops to 96 mmt or the same as last year?
Brazil runs out of soy by December.....

What if soybean prices in USA are US$ 7.00 by Oct?

What if FX is 4:1 and corn is still gold in Brazil this fall?
Could Brazil switch more than 2 million ha back to 1st corn?

Nothing boring about Brazil.

Things keep changing- that is a given here.

Throw in some Trump curve balls or a USA August
drought, we will have ourselves a soybean Olympics yet.


Thank you all


* Drop me a note if you want to subscribe or
get on the VIP list.

We will figure something out that works for you.

Tuesday, April 12, 2016

Sunday´s vote- more than just politics- could be soybean paradigm shift- long term

I am sure many reading this and watching the international media coverage of
Brazil´s impeachment vote must think everyone in Brazil is nuts. I sure would
if I was on the outside looking in. I am sure those same readers think that
Sunday´s vote has nothing to do with me. For those who think Trump will
"Make America Great Again", need not read any further. Go elsewhere.
Kim Kardashian has some new nude photos posted. They are much more interesting.

I will start by saying that it is impossible to predict anything in the near future
for Brazil governance. More than likely the next 6 months will look like making pizza
than anything else. Sunday´s vote is just the beginning, it is not the end of anything
or anyone.

Sunday´s vote by the House of Representatives is basically putting Dilma in the
penalty box for up to 6 months. Dilma/PT could survive this yet. It could happen Sunday,
it could happen in the Senate, it could happen via Supreme Court, it could happen
in 6 months once a final vote is made.

The final vote count is set for Sunday evening. It is HOT and DRY in Brasilia.
Hundreds of thousands of people are set to be camped out there pro and against
impeachment by Sunday. People will be thirsty, hot, some drunken, and tempers could
flare at any sign of unfairness. Even if Police and Military control things on site,
there is nothing stopping people from turning to the streets and vandalizing the city or
government buildings. Where does the losing side expel their energy Sunday?
Where and what form does the orgasm come in? Passions are running high on both
sides. As the Rolling Stones would say "I can´t get no satisfaction"

If I were looking at Brazil from the outside, I would wonder how the hell can this
country produce 100 mmt of soy, 85 mmt of corn and 630 mmt of sugarcane? One must
understand that Brazil Ag is an Oasis in a vast wasteland of Brazil politics.
It is the only sector holding the country together- by a thread.
The Brazil ag potential is staggering if it were allowed to run free, be taxed less,
and have decent infrastructure.

This is where my blog is going tonight. I am looking at three possible outcomes
of the current political and economic mess. One of the three is status quo.
Not much of anything changes. Two more years of fog and we limp along.
Depending on the Person(s) and government that replace this one, we could look
back in two years and wish that was the case. We will look back at old days and say
that was not so bad.

Staus quo case

Dilma holds on to power by a thin margin vote- be it Sunday or 6 months from now-
markets and FX react violently. The Dollar/Real moves from 3.50:1 to 4.30:1 in
a few days. Talk of 5:1 in near future. Business gives up and throws in the towel.
More stimulus and help for poor. Brazil prints more money and burns foreign reserves.
Foreign investment disappears. Inflation is rampant. Brazil soy farmer encouraged
to plant everything to soybeans. Soybean prices collapse in time affecting USA
farmer in long run. Two more years go by with not much change.

Extreme case #1

Dilma is impeached and Supreme court decides that new elections will be held in
60 days. Keep in mind this could be 6 months from now after a trial and final vote.
In other words, late 2016 elections.
New candidates position themselves in coming months. Some old candidates rise to the
top mainly because of name recognition, public trust, and calm the PT party down.
A possible candidate is Marina Silva. She is known as the environmentalist.
If she would come to power as a default candidate, this would wreak havoc on
Brazil agriculture to epic proporations. All land expansion would stop.
Strick enforcement of current Forest Code and burdensome fines for producers
not in compliance. Belo Monte Dam project shut down immediately. This limits
Brazil´s long term energy growth. Energy prices continue to increase. Inhibits
maufacturing and GDP. Brazil ag area would likely start to contract. Production would
start to decrease. Production would switch to Argentina with pro-growth government.
China would react in fear because Brazil is the only country that can surge to
meet their protein demands in the coming 10-20 years. Brazil would become the
ODD MAN out in the world. Tree huggers would love us and everyone else would
come to see the alligators and panthers. Brazil Ag would start to die.
Boon for Argentina and American/East European farmer.

Extreme case #2

This is probably the one I would prefer. Dilma is impeached. A new government
is installed. A pro-business, pro investment candidate rises to the challenge.
Who that is today? I have no idea.
Limits on foreign ownership of land are incrased to 100,000 ha +.
Foreign investment is encouraged. Brazil market is opened up to the
world. The REAL strengthens. This is a short term head wind for ag,
but with renewed sources of credit and Brazil economy growing
again, prices adjust and ag works through this short term head wind
for the long term goal of better markets, infrastructure, and competitive
advantage long term. This is what the modern dynamic Brazil farmer wants.

Are there other possible scenarios? sure

I wrote this blog to help better educate the American producer that yes, Sunday´s
vote will affect him at some point. It is an inflection point for Brazil.
If they get it right, as per Argentina´s recent "Ag Renaissance", Brazil´s
best day´s are ahead of her yet. I am optimistic yet. But, if they get this
wrong and we start to look like Venezuela, the phrase " God is Brasilian" can
be changed to "God help us All."

I repeat, Sunday´s vote is not the end but the Beginning. The beginning
of a process that will make many want to vomit.

This vote will go down in history as the vote that changed Brazil for the
better or for the worse 10 years from now. And the form of the new government
will likely dictate soybean fundamentals for years to come as a result of the
law of unintended consequences kicking in at some point.

I am working on a new newsletter. It will feature the switching of 1st crop
corn to soybeans in Brazil since 2008. Now with FX gone wild, and Brazil exporting
all its corn and at the same time as a drought in the Cerrado, we will likely see
the reverse happen in 2016/2017. The southern livestock growers need more corn
earlier in the season. Mato Grosso is pushing corn out the Amazon and inverting
the normal flow of things even with record crops.

The point is, we can soon see a scenario where Brazil soy area starts to
shrink in near term. Details in next newsletter.

Enjoy Brazil Super Bowl Sunday !!!

It might not be football, but the emotions will be running high on Sunday


Thursday, April 7, 2016

April Conab report comments

Well, after 4 months of swimming against the tide, today Conab corrected
the Brazil soybean crop euphoria. This was never a 103 mmt crop. Never.

The weather situation this year was terrible. As of today, the weather is
still terrible. Hot and Dry.
Cotton and corn in Eastern MT, Goias and Bahia are suffering.

Is it a red alert yet? No

Could it be in 3 weeks? yes

Given the hell this years soybeans went thru, I am amazed we are even
talking 99 mmt yet.

FC stone adjusted their crop size lower to 97.5 mmt. This is what I have been
saying since Early December.

If it were not for Intacta II soybeans and Elatus fungicide, we would be looking
at a Brazil soybean crop in the low 90 mmt range.

IMEA will update their Mato Grosso soybean crop estimate soon. I think they will
be 27 mmt or slightly below.

The NE quadrant was ravaged this year. I feel for those guys. The NE tends to
have 7 year cycles of plenty and 7 year cycles of famine.
We are in year 4 of famine. I wrote about this in the November newsletter.

Being an agronomist and producer with experience with crop losses first hand,
it was obvious to me that the soybeans were screaming for help during these
120 deg days in December and February. They were cooked at the beginning
and cooked at the end. Poor seeds that were cooked in storage did not have vigor,
and some farmers cut costs by not spraying fungicides and insecticides while their
crop was burning up. I would have done the same thing. Screw it.

For those that had a good crop. My hat goes off to you. Those who got the extra rain,
have clay soils, and poored the money into the crop had some 60 sac soybeans.
I guess we can grow soybeans on 1200 mm of rain if they are timed right.
Those with sand, never had a chance. Brazil has a lot of sand in the frontier areas.
I have been to them all and helped shovel out a 4X4 pick up stuck in sand as though we
were in 3 ft of snow. Land like this is worthless in a year like this.
It needs to stay PASTURE !!!!!!!!!!!!! FOREVER!!!!!

The corn production forecasts as of today are reasonable, but if rains shut off
for 3-4 weeks, the 2nd crop corn is also overstated.

Below is a snap shot of the newsletter I sent out the end of January after my crop tour.

For those whoe want a free copy of a newsletter, please visit

click on the button

Wednesday, March 16, 2016

Welcome back old timer,

Whew, just in the knick of time. We needed you back. Brazil should be thankful that
a retired old man would be willing to come back and take the tough whipper snapper
job of Dilma´s Chief of Staff. Make sure your blackberry has a new battery. You
are going to need it !!!!!!!!!!

By the way old timer, there is a new app called Whatsapp. It is free.
This will help you communicate with your staff back in Cuba.
Now that the port in Cuba is finished, which Brazilians paid for,
USA entrepreneurs will soon be using it to import wheat, edible beans and Iphones,
into Cuba. Maybe you could use that squid-like charm of yours to get that railroad
built to Mato Grosso?

Your young, attractive protoge promised us this railroad back in 2010. During the
commodity boom, Mato Grosso doubled her grain production and we need a little help
out here. Maybe you could use your squid-like eyes and talk to the Chinese. They
might buy you a choo-choo train if you are a good boy.

The significance of today´s events are far reaching and long lasting. Subscribers
email and call asking what is going to happen next?
When you are dealing with people that make the rules up as they go and they do so
in an irrational, survivalistic manner, it´s damn hard to out maneauver these guys.

The markets do not like uncertainty. I felt quite confident that the recent rally
in Brazil stock market and Real was pre-mature. Brazil is good at making the wrong
decision. They did so with breath taking certainty this week. Double down on what
does not work. You are down to your last few chips and you go all in knowing you
must get a black jack just to get back to even.
As I write this, the president of the central bank says he is likley to step down
without fiscal responsibility.

The risk is if the country descends into chaos. There is rurmor of a country wide
voluntary business shutdown in March 30th. This is a protest to the current

The question now is: Why impeach Dilma? In essence she is not President anymore.
She has wasted her mandate and gave what was left of it back to her mentor.
With the mentor basically senile, it seems to me he will burn off what is left
of his personal politcal capital in coming months. He has said no to fiscal
reforms and social benefits. Keep the poor fed, some beer, and games to watch,
they will allow you to stay in power.

Olymics are coming up. Nothing is ready. How do you have impeachment hearings
and Lula in the background acting like a victim while we have an international crowd
to impress?

Nothing happens in Brazil as quickly as we would like. When I hear people talk
that she will be gone in a couple months, that tells me expect a year to go by.

What could change this? We need another national protest double the numbers
we viewed last Sunday. That could get the ball rolling. Its in the Brasilians
hands. More of the same? or will 1 million descend on Brasilia one weekend
to end this? Notice in the protests that most everyone was old. Not very many
young folks. Many were at a rock and roll concert all weekend in Sao Paulo.
Sex, Drugs, and Rock and Roll, no problems here. Such is Brazil.

There are two very distinct scenarios unfolding for soybean farmers in both

If the current lack of fiscal restraint continues, the Dollar:Real will continue to
widen and give incentive to Brasil farmers to keep planting soybeans at any price.
With Dollar 5:1, US$ 7.00 soy at CME is workable here for 2017.
Not easy, but workable. Imagine a 4 billion bu USA crop this fall??

If Dilma and Co. fails and impeachment proceedings continue, look for the
Dollar:Real to trade 3.50:1 at that time. This will cause the Brazilian
farmer to hit the pause button and stand pat for a couple years until
margins return to their favor i.e. lower costs of imports etc.

Add into this the Feds decision to keep interest rates low.

Add into this the USA political circus. What if Trump wins?
What if Trump wants to play hard ball with China? tax imports?

How would China respond? Cut back on USA imports of USA soy?

My guess if there is even a hint of Trump being President this fall,
we will see Chinese trade and infrastructure teams literally living
in Brasilia and Mato Grosso.

Trump wants to build walls.
China will pay for, build, and pay a surcharge too boot for
them to access protein from Brazil with more ease.

Exciting times ahead.

1. Dilma gone= lean times for Brazil farmer but save the country.

2. Dilma/Lula hang on for a year- Dollar is 5:1 and soybeans trade 7 bucks
in Chicago we have a USA ag crisis on our hands. (kinda need a drought wink wink)

3. Trump is President, walls go up, stronger dollar, and trade wars start.
Also causes USA ag crisis and plays into Brazil ag no matter who is President
or what the economy is. It won´t matter. Full throttle production.

4. X factor

Trying to figure out Brazil today is like playing 3 dimentional chess with Spock
on Star Trek. And the table is rotating too ........

More later



Saturday, March 5, 2016

Politics, Soybeans,Drought,FX and Frank Underwood $$$$$$$$$ Game Changer

Brazil farmers and commodity funds were caught off guard this week.

We had been trading about 4:1 Dollar/Real the previous two weeks.

With the Brazilian farmer about 60% sold on his soybean crop combined
with some regions losing production on a daily basis, he is holding
on to remaining production using it as a currency hedge.
The idea among locals is that we should be trading 4.25:1 by now given
the political and economic instability.

Out of the blue, the Federal Police have illegal campaign contribution proof
on Dilma and they took Lula in for questioning on kickback schemes from his
administration and operation Car Wash involving Petrobras. What did he know
and when did he know it? Reminds me of Iran/Contra and Reagan Admin.

It was like being in an episode of "House of Cards" Friday. I was flipping back
and forth between NetFlix and Twitter updates on the state of the Brazil politic.
I kept asking myself, if Lula was Frank Underwood, what would he do next?

The stock market and FX market exploded higher thinking that the Feds finally
have the Goods on the PT.

I stopped by my local butcher this morning. He hung his head low. I am sad he said.
I am embarrassed. I voted for Lula two times. My god how they have been stealing
from us all this time. I did not want to believe it, but now I have too.

Lula exited his term as president with 90% approval ratings. He will die
being known as a common criminal now. Reminds me of the Madoff scandel.
It was all an illusion.

The FX rallied to 3.65:1 before selling off back to 3.75. No one was expecting
this !!! Domestic soybean prices are selling off at a rate of 2-3% per day.
This is the worst nightmare for the Brazilian farmer. A static/weak CME and a stronger
REAL- they cannot control their risk and protect cashflow gross revenues.

It was fun on the way up, CME at 9 bucks and weaker REAL. They did not need to do
anything. Now we have had a 9% drop in FX and CME rallies maybe 2%.

Part II

Many videos have come out of Bahia, Maranhao, Piaui, and Tocantins. The situation is not good.
We have seen this movie many times. We have a state that produces X and commentators
come out and talk of 10-20-30% losses. Many times we hear of losses of 1-2 million tons.
In the end, the loss of production ends up being about 500,000 tons.

Is it the same thing this time?

The timing is bad to be optimistic on production. Late planted soy in December and January
are at high risk. The soils tend to be sandier in the NE and have less staying power to hang in there.

We have a Conab report on Thursday March 10th.

Conab, as with USDA, is always compiling data from 30 days ago. So Conab would be putting
together data as of mid-February. Until then, yields in Mato Grosso were coming in better
than expected. So we could see an adjustment higher in the interim in some states.

From mid-February until March 5th, we have seen a rapid deterioration in the soy crop in
the MaPiToBa region. This extends across northern Goias and into the Eastern 1/3 of
Mato Grosso.

Recently, we have seen various cropcasters increase their soy crop size potential for Brazil.
The ranges have narrowed to 98.5 mmt to 101.5 mmt.

What do I expect the next 30 days. I think we have seen the high water mark for Brazil
soy crop size. The question will be if Conab makes further adjusments lower in March
or do they stand pat and then adjust lower in April.

The point being, that if Conab would increase slightly in March, they will likely decrease
in April and May. The markets will anticipate this.

The last 33% of the Mato Grosso crop will have very low yields. This will affect the final tally.
MaPiToBa could be 500,000 tons to 2 million tons overstated as of today.

The Parana crop will likely be same size as last year. This means a 500,000 to 1 million
ton cut there.

Mato Grosso do Sul has suffered some losses due to too much rain at harvest. It has been called
a 7.5 million ton crop, but will likely edge lower to 7 million ton in time. This is a tough call
because some producers harvested their best crop ever in the state.

Rio Grande do Sul has a very nice crop on deck. Their production could actually be understated.

In closing, with Friday´s market action in CME and FX, we will likely continue with the soy rally.
Brazil farmers will not sell the balance of their production.
We will likely see some weather premium come into USA market if the hot and dryish pattern
A rally to 9.20 seems likely now. Could we see 9.50-10 bucks by June?
yes, I think we can.

I think the talk of 8 dollar soy has been negated now by the change in FX and the shrinking
Brazil crop size. The last 10 days have taken its toll in some regions.

Thus, with a weekly reversal, and technical breakout(maybe next week), the fundamentals ranging
from lower yields from later soy, FX, CME rebalance, domestic premiums, and spring weather
for USA, should allow us to stay above the 8.50 lows just put in and the trend should be
higher and not lower in the coming weeks.

I think we are putting in some very long term lows here. I am mildly bullish as we get through
this harvest process. From May forward, higher prices should be the theme.

Thank you for the new subscribers in recent weeks.

I will be at the Lucas do Rio Verde Ag show the end of March.
I will attend the ground breaking for the new Corn ethanol mill there.

April newsletter should go out on March 31 or April 1.

Clients that signed up for the 3 month VIP trial period back in December have now
renewed for 1 year.

If you have interest, drop me a note, maybe we can work something out that fits your


Saturday, February 20, 2016

Feb 20th Blog Soy, Corn, Zika, Econ, Prices, Export taxes etc

It has been awhile since I have updated blog.

I have been busy. Some work related and other personal.

Everyone wondering about crop size. Me too.

Lately yield reports are quite good. There some 60 sac/ha or 54 bu/acre
soybeans in Mato Grosso and many other parts of the country.

I do know of a couple fields that have yielded 75 sacs/ha. Intacta soy
and a little luck with rain. I still hear and see of fields yielding 20 sacs also.

SW Goias state seems to be in good shape compared to previous two dryish years.
(Many are reporting on Goias and MGDS applying export taxes).
In my opinion, this is a non-event. If they export too much some excise taxes
will kick in. But for now, steady as we go.

MGDS is coming in with a great crop. Rain makes grain.

I have heard of some 80-90 bu/acre soybeans being harvested in Parana.
These are small fields. But, none the less- damn impressive.

I still see photos of short beans in many locals. There is still a boat load
of average soybean out there yielding about 40 bu/acre.
How does this affect the tally at end of the day??
I still lean to the conservative end of any estimates out there.
It is an agronomist/farmer thing- nothing scientific.

We have millions of hectares of soybeans planted in November and December
and a few in January also. We are in uncharted waters as to how normal
cycle soybeans will yield out of the normal window. They won´t freeze- wink wink,
but Sun could surprise us either up or down on final yields as time goes on.

What will Conab say March 10th? God knows....
The litmus test for me in February was if they would print a number
above or below 100 mmt. If above 100, which it was, they are still
optimistic. We production bears maybe wrong....


What if they print below 100 mmt in March?

May soybeans seem to want to breakout to upside. If the crop is
a 100 mmt+, why are beans wanting to trade higher?

I have seen technical analysis showing a solid argument for 7.90-8.00
soybeans in the months to come. Even 7.50

I have seen wave counts point to 10 bucks if we pop out of this consolidation

I am of the mind since November that 8.43-8.47 are solid lows.
But I think getting on top of 9.20 will also be very difficult given
the size of Brazil and Argie´s crop.

We had Brazil analysts saying Mato Grosso crop was gone in
late December and expect 12.50 soybeans by February. The USA
does not have the supplies to meet Chinese demand. I said Huh???
All I see these days are 450-500 and even 650 million bu carryovers
in USA going forward. Lots of beans.

I have read that if Brazil soy crop is only 97 mmt,in theory, Brazil would
run out of soybeans later in the year assuming record crush and exports.
(This is mildly bullish longer term if we can get this crop size below 100 mmt)

2nd crop corn area will be large. I think it will take away from the
680,000 ha of 2nd crop soybeans that were planted last year at this time.
The size of Mato Grosso and Brazil 2nd crop corn will depend on May rains.
The crop is going in late. They have been lucky 5 years in a row. Can they pull
out another one?

I have posted a fantastic report from IMEA on my website.
It is the 2025 Outlook in English. It is really really GREAT.(trumpism)
I will put together a newsletter around this with my comments and opinion
as to how realistic it is. But every producer in the world should have this
file memorized. If we stay weak on Argie and Brasil FX, these guys can keep
expanding as long as credit and infrastructure are there to move the stuff out.

I thought I was going to be in Rio Grande do Sul this week and then Mato Grosso.
But Zika news has caused my client to cancel his tour for the time being.
Probably a wise move but I am too numb to worry about it. 15 years here you will
realize something or someone else will kill you before a mosquito does. This is
also Viking mentality.

Economy is shrinking. My John Deere dealer buddy is now in training with JD
construction. He left ag sales for now. Small mechanic shops and salons locally
are closing do to lack of movement. Reports of Sao Paulo real estate is down 20%.
Seems to me a 50% correction would be a nice start.

The weather is hot and dry again. This is strange for February. The soil has enough
moisture to germinate and grow like crazy. The end of April and early May I will
be on the edge of my seat again just like at Christmas. How much did it rain???
Did you get any??? and the 2nd act will have begun.

Saturday, January 9, 2016

January 9 blog update

Rains have come, now what?

Early yields in Mato Grosso are from 19 to 49 sacs/ha.
17 to 43.5 bu/acre

What do we do with that info? 1% harvested

Many say they have 60 sac soybeans to harvest end of January and early Feb.
I am sure there will be some.

I look at it like this.

Mato Grosso, in a normal year, is 80% good to excellent all the time.
20% has a drought issue or too much rain at harvest or some such issue.

This year, that is inverted.

80% of the state had problems at some point or another and 20% of the
state was good to excellent.

"Some are still planting" !!!! This is like planting soybeans in July.
Northern hemisphere

I will do my personal tour and report to my subscriber list directly.
I do not plan to post much here in the coming weeks.

Early Parana yields are not good. About 19% less than last year same field basis.
1% harvested
Test weight is the issue- there was no Sun thus no photosynthesis.
Later soy is being attacked by rust. If you used tier one fungicides such as Elatus,
(Syngenta product)you are OK. If you used older, cheaper fungicides,
the rust is breaking through.

Conab crop report will tell the tale on who has been naughty and nice.

December Conab started with 102.5 mmt.

If they drop only 1 mmt on Tuesday, the Brazil soy crop will be big.
Congrats to those who were not swayed by drought talk and images.

I personally expect them to cut production to sub-100 mmt and stand pat
for 1 or 2 months until more data comes in.

It will be a long drawn out harvest. We will have data coming in yet in May.

I will be traveling a lot the next 7 weeks. Mato Grosso twice and Rio Grande
do Sul also.

I will be directing my reports to subscribers only in the near future.
100% renewal rate for 2016 and many new subscribers also.
Many have been with me 10 years now. I do appreciate it.

It is time to spin the soybean roulette wheel:

Red or Black?

Red 99 or Black 101 ;>)

or maybe "snake eyes" is the better analogy
Craps- We are all wrong !!!!!!!!!!!!!!!!