Jan 20 comments and thoughts Brazil and AR

It has been awhile since I have posted.

It is holiday season in Brazil and people are running from
vacation spot to vacation spot.

I have been making plans to be in USA June and July this year.
We will visit Orlando and drive across the USA visiting family,
clients, and land marks along the way.

I was almost there for Dec and Jan this year.
With the minus 70 degree temps I have seen on the weather
maps in recent weeks, we are thankful that we did not go.

When I was young, I thought nothing of working when it was
minus 30 or minus 40 deg below zero.

I now have 5% Brazilian bio mixed in my blood.
I tend to "Gel" up as temps drop to about 40 deg F now.

I have been sending out almost daily updates to subscribers
as per yield talk, harvest progress, and tidbits about economy
and politics here.

There are many bean counters these days. Everyone seems to
be able to pull a production estimate out of their bum bum while
sitting in an office thousands of miles away. Their powers are
beyond my understanding.......

For the most part the soybean crop is very good.
The yields in Mato Grosso will be record high.

The early yields in western Parana have been a bit light.
Drought stress in December.

SW Goias looks to be losing about 1 million tons because
of drought.

Other areas are getting decent rains.

The news items about bugs, worms and Asian rust are all
non sense these days. Much to do about nothing.

This is not to say that they don´t exist, but at the end of the day
a farmers spends some money and the professional agronomists
get out their life sabers and deal with the dark side. I never doubt
a farmers ability to spray and the agronomists ability to find problems
to spray for.

Monsanto´s RRII Intacta seed is doing very well repelling the dark side
critters. Intacta will be planted in high volumes in 2015.

The week ahead looks rainy which will delay harvest a bit.

For the time being all seems calm and under control in Brazil.

My attention is on Argentina. With the dollar at 12:1 there and talk of
limiting certain items for sale in the super markets, I cannot help but think
that Argentina´s  economic and political days are numbered.

How this unfolds will likely affect strikes, soybean sales, soy crush,
energy, and ability of the market to nail down supplies of wheat,
soy and corn in coming months.

World Cup games start June 12th.

Brazil elections in Oct.

Last night I went to the "Wolf of Wallstreet". God I love that film.

It was a wild ride.

I sense Argentina might be in for something similar in coming months.

K.

American LLC for sale in Tocantins

http://www.brazilintl.com/agland/farms4sale/01/0101.htm#.UrgLV9JDtl6

Drop me a note for more info.

Kory

Lucas do Rio Verde ag show March 25-28

For those interested in an early ag show in Brazil combined with
Mato Grosso tour, the new Show Safra 163 March 25-28 is the
perfect option.

They are combining two shows and making one.

Hotels will be limited. Book early.

All other big ag shows are April and June.

It is difficult for many to get way.

FYI

Soybean bugs

I am headed to Mato Grosso on Friday.

There has been some news talk of the attack of the
caterpillars in some locals.

I am not too worried about the bugs. They can be
controlled. It might cost some extra money on a year
with thin cash flows, but I would not lose any sleep
over them.

Bahia and Parana have been on the cusp of  too dry
of late. This is not a Def Con concern at this point.
Western Mato Grosso is also talking about limited stands
because of early germination issues. Maybe the possibility
of losing 1 or 2 bushel per acre potential. Again, not a
Def Con issue.

http://en.wikipedia.org/wiki/DEFCON

Two years ago, subscribers remember when I went to
Def Con 2 on the drought seriousness at the time.

I think we are still looking at a wicked big crop.
It all depends on if we plant 500,000 or 1 million ha
of double crop soy.

Thy Soy Cup Runneth Over.

The soybean crop is fine.

More later when on the road.

Bunge -Maggi Joint venture barge traffic on Tapajos River

http://www.scotconsultoria.com.br/noticias/agronegocio-na-midia/32565/bunge-e-amaggi-criam-empresa-de-navegacao.htm

The American multinational Bunge and Amaggi - André Maggi Group company, the senator and former governor of Mato Grosso, Maggi - just created a joint venture inland waterway transport in the country.

The Navigations Nations Tapajós (Unitapajós) will be responsible for the transport of grain from Mato Grosso the waterway Tapajós-Amazon to Santarém (PA), an alternative lower cost to businesses. With an initial investment of 

R$ 300 million, equally divided, the company will build 90 barges and 5 tugboats.

The Unitapajós intends flow approximately 3.7 million tons of grain in three to four years and should start operating already this season of 2013/14.

Source: Economic Value. By Bettina Barros. October 30, 2013.

This is a really neat development.

The barges may beat the train project to functionality.

This will help knock a few miles off the truck route to Santarem.

There are hydro-electric dams either planned or being built up stream 

from this point. 

The irony is that the past few years, Mato Grosso has been surging

at a rate of 4 to 6 million tons of crops per year.

Thus this new idea only deals with 10% of the growing problem.

But this will help take the pressure off of the southern ports

in time.

This is one small step for soybeans-a giant leap for soybean-landia.

Fiesp 2023 Brazil soybean production projection

Here is a chart from a recent Fiesp presentation.
They are thinking that Brazil will be at 119 million tons
of soybeans by 2023.

Given recent expansion rates, it should be no
problem to get there. BUT, we need shipping
logistics and soybeans in Chicago to stay above
10 dollars/bu and preferably 11 dollars/bu consistently 
to foresee these volumes come to fruition. 

What is new?

The month has been crazy.

After an 18 month ordeal clients of mine closed on a land purchase in
Mato Grosso. It took a dynamic team, money, patience, and an
emotional fortitude that many do not possess. It takes trust with
Brazilian counterparts to finesse difficult situations and obstacles.

Something always pops up in Brazil.

On top of that were some personal surprises.
Medical procedures for my son where the reception forgets
to schedule an anesthesiologist. A root canal for myself.
And to cap it off but good, a prank call from kidnappers
saying they have my son and want a ransom. This call
came while he was at school. One sees one´s life pass
in front of you when dealing with kidnappers for 10 minutes.
It really rattles the nerves.

Brazil has increased its benchmark interest rate to 9.5%.
They say 10% is soon to come.
I read in local paper that credit for buying a new car
is much more difficult to get than last year during the
stimulus phase. Goiania has record number of car
Re-po´s at the moment. A sign of the times.

Apartment prices seem strong yet. I wonder for how
much longer. Neighbors of mine that are typical middle
class. He is a professor and wife manages the car wash.
They made a down payment on an R$ 800,000 earlier
this year. The building will be ready in 2016.
I visited this hole in the ground last week. The apartment
design is fantastic. I was told there was one unit left.
I said I can´t afford this. This is the same apartment building
that my neighbor bought. I have had a difficulty getting R$70
a month out of them for garage rent for their 2nd car. I had
extra spot for them. How the hell are they gonna pay for
R$800,000 apartment? It is so easy- make a small down payment
and then monthly payments for 3 years and then a big balloon in three
years?  Then what?  boom?
This real estate market in Brazil is looking more and more
like USA market circa 2006-2007.

By now some of you want some soybean gossip.
Planting has started and we are off to a good start.
Rains have been good and crop is off to nice start.
The biggest problem will be the carryover of the 2nd crop
corn in many locals. Many are hoping to set a cup of milk
out next to a pile of corn and hope like hell Santa takes
the corn with him Christmas eve. New crop soy will be ready
Janaury 1, 2014. Record crops are expected in all regions
and there is simply not enough storage.

Expansion and productivity are out running the grain merchandisers
ability to build mega- warehouses fast enough.
Brazil is burying herself in corn and soy.
Sure hope China is hungry.

Local prices for 2014 soybean crop for Mato Grosso is about
R$43/sac or US$ 9.00/bushel.
yes,  - 4 dollars basis. I will repeat minus 4 dollar basis to CBOT.
enough said

Cash flows are running tighter than last two years. There still is
a nice return over variable costs, but if we add in land and depreciation costs,
we are looking at a break even scenario.

Stores are starting to put out Christmas decorations here. Tis the season?

I have increased the price of newsletter for newcomers. I tend to
send out a daily Brazil nugget about something or another for
either Brazil or Argentina. I am trying to focus my energies on my
VIP client list.

School year ends here December 6th. I plan to be at Rio Quente
soon thereafter for a break. If time and finances allow, I will take
family to Disney/Orlando in January.

I have an executive Mato Grosso tour scheduled for mid February
from Washington, DC and NYC.

At the current time, it looks like South America is going to
produce so many soybeans that the earth will like flip over
on her axis by March 2014. It won´t be a magnetic pole shift. It
will be called the soybean shift in the agricultural history books
of the future. 2014- the year the protein shift took place........