Wednesday, August 29, 2018

Aug 31 blog Something I never thought I would see in my lifetime


It has been awhile.

Politics in Brazil has been the center of attention.
Impossible to predict at this point.
Left vs Right.

More erratic behavior by the FX will be the norm through Oct.

I was sending out 2019 new crop price updates to clients today.
Then it hit me.

I am experiencing something I never would have thought possible.

I first visited Mato Grosso in 2001- pioneer and land clearing days.
I remember price of soy was R$ 18-20 per sac back then.
Soy was about US$4.50 in Chicago. LDP's were the mantra and double Amta payments.
We were putting land into CRP and these lunactics were clearing forest and expanding
in Mato Grosso. Cash price was about US$ 3.75 per bushel at the time in MT.

This does not compute I told myself.

This was all pre-Asian rust so production costs were much lower than today's
high tech ag methods.

I come from Northwest Minnesota. Generally speaking, the cash price
of soybeans in Sorriso,MT has been the same or a little less than my local price
in US dollars per bushel.

FX, freight rates, port premiums have tweaked that from time to time.

We have all seen the challenges to get Mato Grosso production to port either
via Amazon or southern ports- sometimes trucks and sometimes trains.

What grabbed my attention today is that new crop 2019 soybeans for
January delivery in Sorriso is R$67 per sac or US$ 7.40 per bushel.

NW MN cash soybeans today are US$ 1.80 under Chicago.
The net price is about US$ 6.60 per bushel today.

We now have Mato Grosso beans worth more than NW MN and
ND beans. Tap your heels together 3X Dorothy, you ain't in
Kansas anymore. 

We all know MT beans need to travel via covered wagon, through
the rivers, and past the alligators, anacondas, and natives on muddy
roads. And still the beans are worth more than if they took a leisurely
ride on a train to Portland.

As I said above, I never thought I would see the day that beans grown
in Mato Grosso will be worth more than beans from Canadian border.

Ponder that

Just think what happens when these Mato Grosso farmers get one
of those swanky new choo choo trains.

All aboard !!!!

Enjoy the ride !!!!

I expect it to be very scenic the next 60 days!!!


keywords: MT soy, prices, NW MN, basis, MT history