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