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.