Sunday, October 20, 2019

Oct 20th blog update

It has been awhile since a blog update.

I have been focusing on the newsletters.

Soybean planting has been closer to the 5/6 year average
pace. Compared to last year, it seems late.

Western Parana is the area of concern again.
Much unplanted and many will be replating
due to hot dry weather.
Any replanting areas will not have a chance for
2nd crop corn. It will be planted in March 2020 and
it will not be viable.

BR Corn prices have spiked in the last two weeks.
The market is sensing it will not have the extra
tons to ship willy nilly in 2020.

Domestic corn demand continues to rise with
increased corn ethanol production, increased
pork and chicken production too. China
has been buying pork, chicken and a fair amount
of 2020 soybeans too.

Port bids for new crop soy have tanked which makes
Brazil new crop soybeans cheaper than USA at the moment.

I think Brazil can still produce a decent soybean crop,
but the total corn production will drop in 2020.
We will not be producing 100 mmt of corn.

Rain is in forecast for Goiania for Monday. It has been
95 and clear skies most of the time. We have had two shots
of rain and they were light. After this rain chance,
it is to turn hot and dry again into November. That is
when the good rains are set to come. Very late indeed.

Back home in NW Minnesota is a battle. Record amounts
of rain for Sept and Oct. Some areas getting 15 inches in
a little over a month. Big rains are not unheard of, but to
get rains like this in late Fall, that is strange.

Many have bought tracks for combines. Several have
tracks on combines year round from previous experience.
Soybean basis has narrowed to minus 1.18 under Chicago
which is actually quite good. Last year at this time, we were
circa - 2.50 under CME.

We have a decent soybean crop, but it is hard to know how much will
get harvested. Ideally, the ground would freeze into November and go on
the frost. But if it snows, they are screwed. If it freezes, that means
no tillage, and that creates new problems for 2020.
Minimal fertilizer sales, seed sales, and much talk of pre-vent
plant for 2020. Without a significant rally in Chicago, the
attitude will be to say screw it.

I can only imagine what bankers are thinking. Many operations
were on thin ice last winter, I can only imagine what the discussions
will be this winter.

This is the problem with precision ag, when it works and conditons
are nice, it sure can produce a nice crop with all the passes.
But, when conditions turn sour, what good are GPS, globes and
high tech screens when one is just trying to stay afloat, much
less, stay straight. Do the micro nutrient passes and fungcides
matter when the crop is covered in snow?

It does make you wonder?

I know I sound like a pessimistic party pooper, but I am looking
at those who are in survival mode verses those who spend for
top yeilds all the time. Who will be right?

I have told many tour groups that have come to Brazil.
All the technology that is being developed from GPS, high
speed planters and prescription farming plans are all great,
but we will see a time where we cannot afford this in USA
on 80 acre tracts here and there and all this stuff will be applied
down here on the 5000 to 10,000 hectare blocks of land where
they produce 2 or 3 crops per year consistantly.

I know it is a tough pill to swallow. I do not like making
the statement. But, I fear it is closer to reality that we

We seem to have some sort of trade deal on the horizon.

The 50 billion number makes a guy wonder.
I doubt the Chinese will damage the Brazil relationship.
I think USA will go back to a normalized soybean run of
30 mmts and Brazil will stay at 40 mmt+ for the near future.

The surprise might come from a corn, wheat, ethanol, DDG's,
lumber, or cotton mega purchase from USA.
The bull market is likely sleeping yet in some other
commodity outside of soybeans.

I will continue to update subscribers in Real time.

Thanks for all the 2020 renewals.

Much appreicated