Happy New Year
I am not sure where 2021 went? For us, it was all a blur, but everything ended up being ok.
I would like to thank all the new subscribers and VIP clients this past year. I would also like to thank all the old subscribers that continue to renew year after year. It is appreciated.
I find myself working through the holidays- just like last year at this time with Brazil drought concerns and a bull market in the making. I have outlined my price objectives for new crop soybeans and so far the soybean market is behaving as expected. I must say the May through October time frame was confusing and stressful.
Western Parana, Santa Cat, parts of RGDS, and Paraguay are suffering a historic drought. It seems like every year they have some sort of dry spell and each year it gets worse. Last year the soybean crop was planted later and or replanted, so when the rains came in December, the crop still had time to recover and still produce 20 MMT each for Parana and RGDS.
To keep things in perspective: Parana + RGDS = 1 Mato Grosso.
20 MMT + 20 MMT = "one" Mato Grosso or 40 MMT.
40 MMT = 1.45 billion bushels
1.45 billion bushels = all the soybeans in Iowa and Illinois combined.
Mato Grosso is in fantastic shape.
As of December 20th, Sinop, Mato Grosso had recorded 1000 mm(40 inches) of rain since the beginning of the crop year starting in September. Compared to recent years, this is above normal rainfall. However, compared to 20 year historic rainfall, this is about right. We should get another 1000 mm or 40 inches from late December through the end of February. Normally, these heavy rains come in late January and early February and are called the "Amazon rains".
With the soybean crop ready to be harvested in early January, we must hope these rains diminish in intensity so as to allow harvest and get the 2nd crop planted timely and in decent soil conditions.
The yields out of Mato Grosso should be "awesome" this year.
By contrast dryer regions, such as Tocantins and Bahia, are getting well above normal rainfall for their region. The forecast is for 16-20 inches in the next 2 weeks. THIS IS A WOWZER.
Meanwhile, Parana, RGDS and Santa Cat cannot catch a rain.
Many fields in western Parana are now past the point of no return. The crop was planted in late Sept and early Oct which means the soybeans are now in the last phases of pod fill. For many fields, it will be too late if rains come in early January.
For RGDS, the situation is more of a jump ball. Early planted soybeans are hurting. However, soybeans being planted into wheat stubble today can still turn out quite well if rains would return in January.
For Paraguay, I am hearing of 30% losses and previsions for 50% crop loss without rains in next 2 weeks.
Paraguay was on deck to produce 11 MMT. Current estimates are for 8.5 MMT and dropping to 6-7 MMT is quite likely given current weather pattern.
Brazil 1st crop corn will not be 29 MMT as previously forecast by Conab. We are now looking at something less than 25 MMT -maybe even 23 MMT.
Brazil's corn ethanol production continues to surge and is helping compensate for last year's sugarcane crop loss due to drought.
After last season's 2nd crop failure with late planting and drought, this is not what the domestic corn market needed. More corn imports from Argentina are needed to balance the supply demand equation over the next six months until Brazil 2nd crop can come online.
The BRL is trading at 5.70:1. Inflation, 2022 elections, and questionable economic policy regarding future interest rates and recession are all conflicting data points that the central bank is trying to deal with.
Strange new political alliances are occurring to try and maintain power and or defeat the current administration. If old PT leaders rise again, the markets will be in turmoil for most of 2022.
AC/DC will sum up 2022- I fear- You shook me all night long ;>)
By the end of 2022, the new theme song will likely be "Shake it off"
I am not sure what will happen in Brazil as per politics, economy, and crop production in the year ahead. What I do know is that Brazil will be the best show in town for most of the year. There will be no shortage of intrigue, drama, emotion, and passion.
70% of the Brazil crop is in great condition albeit a bit wet. 30% is suffering a serious drought.
I have outlined potential crop loss parameters in recent newsletters.
I send out audio reports from time to time. I include videos when possible.
Drop me a not if you have any questions.
I have increased the price of the newsletter and VIP light service for 2022.
or visit my website at www.brazilintl.com
Happy New Year
Kory and Brazilintl team
Keywords: Brazil soy production, Brazil weather, Brazil crop size potentials, BRL, politics 2022