Sunday, January 5, 2020

Happy New Year

The start of the 2020 growing season has been one
of below normal rainfall. Rains are now more general at
the start of 2020.

Mato Grosso has a record soybean crop on deck. Given
all the attention to the Amazon back in August, I must
ask myself where the media is today?

France offers to help Brazil back in August and the
aid is declined. Today, Brazil offers to help Australia.

Bottom line to all of this: In August, that is the burning
season for Brazil. Australia is on fire in December, and
it is not the burning season. It seems to me that is the
story and not the former.

Flip side: Is burning and clearing increasing in Brazil?  Yes

It looks like 10,000 square KM were cleared in 2019.
I am not surprised by this as I predicted this in the August newsletters.
But, to keep things in perspective, back in 2004, the clearing rate
was 24,000 sq Km. So, even though we have seen an increase in
clearing, we are still at 40% of the previous peak. That was happening
before social media was so passionate or should I say fickle?

I still say the bigger story is what has happened since 2004.
24,000 sq KM or 10,000 square miles were opened in one year.
That is 277 townships. Today, those 277 townships all have
70 bu beans on them.

We have had some problems in RGDS, Bahia, and Piaui. There has
been some loss in 1st crop corn and need for replanting of soybeans
in the Northeast. It will take time to see how this plays out.

Brazil economy looks to be starting out on a firm note. 2.3%
growth for the year ahead is the projection so far.

The price of beef is at record highs.

Old crop corn prices are very firm. Brisk export pace and
increasing domestic demand combined with a shrinking first
crop has created some fear in the market.

Look for imports of corn from ARG and USA in coming months.

FX has stablized for the time being after peaking in late November
at 4.27:1. This gets the animal spirits flowing in AG.

Mato Grosso's 3rd 100% corn only ethanol mill will come
online in late January. This mill will be 210 million gallon
capacity when complete. It is huge.

Looking forward, April rains will determine how Brazil
shakes out this year for soy, corn, and cotton.

Will Brazil produce 120 mmt of soy or a 125 mmt?

Will Brazil produce 85 mmt of corn or 100 mmt?

Even with expanded cotton area, will Brazil be able
to repeat the 2019 record productivity in cotton?

The BR 163 highway is complete to Mirituba, Para.
This is along the Tapajos River where barges can be loaded
and transfered to ports at Belem.
Trucks will be zipping north during soybean harvest.
We can now measure turn around time in hours and days,
compared to the last few years, when trucks would disappear for
weeks and even months at a time into the jungle.
I look for these northern ports to increase volumes from about 6 million
tons in 2019 to possibly 10 mmt or more in 2020.
Freight rates have dropped from US$ 60 per ton to ship north in 2019
to US$ 40 per ton in 2020. This is a game changer.

I have increased the price of my newsletter to US$ 600 per year.

VIP light with consult time and special send outs are now US$ 3250 per year.

VIP professional level remains at US$ 6000 per year.

Drop me a note at for more info.

Keywords: Amazon, soybeans, corn, freight rates, Brazil production,
                   deforestation rates, historical comparison

1 comment:

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