Sunday, March 3, 2019

March 3 blog update

Happy Carnival

Brazil is in party mode for a few days.

People seem to forget the dam collapse just a month or
so ago. The situation was handled terribly.
Many still unaccounted for.

The rains have returned and thus the soybean crop
has stabilized. I am at 114 mmt. Others are thinking
115+ and yet others are down in 106-108 area.
We need to keep in mind that the potential was 125
back in December. Therefore, even a 115 number
is 10 mmt off the highs. That is still 360 million
bushel gone from the peak. The drought was significant
in various regions. Historically, it has to be really bad
to lose more than 15 mmt. Those that were thinking as
low as 101 mmt in January were seaking headlines.
I outlined all of this in newsletters and flash updates.

Yields out of Argentina are fantastic. Rain makes
grain. Look for soy and corn numbers to increase even
more down there.

There has been flooding in Mato Grosso and Para state.
This means the early planted 2nd crop corn will be beyond
fantastic this year. Early corn is ready to tassle. With rains
of up to 8 inches in last two weeks, much of the crop
is already in the bag.

Brazil 2nd crop corn

65 mmt crop is already in the bag
70 mmt is likely
75 mmt is not outside the realm of possiblity
80 mmt is being whispered about by some.

80+ 25 = 105 total   maybe ???

Cotton area expanded by 33% so that has inhibited corn's
ability to shoot the moon. Bottom line: there will be
plenty of corn.

With the excess rains, BR 163 has turned into a 70 km long
truck stop. Some trucks have been sitting for 5 days.
No food and all they have to drink is rain water.
Tempers are flaring now.

The military did pave 45 km last season of the last
90 km to get to Mirituba. From Mirituba to Santarem,
there are a few more KM that need to get covered.
They stopped because of lack of material.

Three weeks ago, the new Minister of Logistics went for
a truck ride himself to see the conditions. The drought
was still intact so he was still able to move.

As the truckers say, come out here now, take another
ride and sit with us out here for a week with no food.

The Mayor of Novo Progresso is pleading with Mato Grosso
grain shippers to stop sending trucks. There is no room.
3000+ trucks are stopped.

It is 70 reais a ton cheaper to send soy north compared to
Santos via rail. Either way the grain buyers lose money.

Demurrage going north or higher freight going south.

Farmers are holding on to 2nd half of soybean crop.
They want higher prices.

Port premiums rallied last week and then backed off.
End of trade war has grain buyers worried.
Port premiums might need to go negative in order
to compete with USA and China bids.

I will be going to Mato Grosso March 25th for a week.
The BR 163 Show Safra will be record large again.
I am curious to see the pace of equipment sales
given the crop came in a bit light and cost of
production is on the way up.
Dollar FX  3.75:1

In early April, I will send out a special newsletter
as per my trip. Drop me a note to subscribe.

Thank you for all the kind notes in recent weeks.
Much appreciated.


Key words:  Mato Grosso soy, BR 163, trucks, rains,
Show Safra 163, 2nd crop corn size