April 22
Brazil runs on emotion. It is the fuel of daily life. The politicians know this and prey on it during
elections and play to it during protests. It seems like the climate, the beer, and the girls all get mixed
together and prevent the public from staying pissed off for long periods of time.
It seems like it is easier to stay angry when the climate is cold, the beer is frozen and the
bars are full of guys. The testosterone provokes action and leads to some sort of change
of the status quo.
In Brazil, blue ball syndrom is less of an issue than in Northern hemisphere. Aggressive behavior
wanes in Latin America and, in the end, the issue passes and we worry about something else.
The above is an oversimplification of the cultures, but from a psychodynamic perspective, this
is not too far from the truth.
For the time being the impeach Dilma movement has fizzled.
For the time being, the truckers strikes have fizzled.
Nice rains the past four weeks will increase 2nd crop corn potentials.
Mato Grosso, MGDS and Goias have been very fortunate of late.
The big Agri-show is next week in Brazil. I will be watching for sales results.
I will also be working on May newsletter.
Wednesday, April 22, 2015
Tuesday, April 7, 2015
Soybean expansion continues - Dollar trumps CBOT
I am standing in 2nd year soybean field from pasture in NW Goias state.
This, historically, is pasture region in Brazil.
Rumor has it that one land owner on Mato Grosso side of river will prep 12,000 acres of pasture for soybeans in the coming months to be ready for November planting.
They let 16 and 18 dollar soybeans slide.
But dollar 3:1, let us plant soy !!!!
In the battle between soybean farmers and cowboys, the soybean farmers seem to be winning round ONE.
Saturday, March 7, 2015
Contrary to popular opinion, I am optimistic on Brazil
March 7
For two to three years now I have been writing blogs and newsletters about what could go wrong
with Brazil. All I saw were problems. I was not sure what the catalyst would be for a correction
in the Brazilian economy. I knew that dollar at less than 2:1 and the otherwise irrational exuberance
was the illusion and not the norm. I never dreamed that Brasil´s golden calf company, Petrobras,
would be the domino that started a chain reaction throughout the country exposing so much
corruption, incompetence, and lack of planning in multiple sectors at once - energy,
manufacturing, water, hydro-electric,banking, and ag infrastructure/roads-trucking.
The dollar is now 3.05:1. My old friend has returned. After the trillions the USA has spent trying to
stimulate its economy, I never thought I would see 3:1 again. I lived through dollar 1.55:1 twice.
I was the poor gringo surviving while the Brasilians went on global spending sprees. It was other
worldly to live through. My maid drove a nicer car than I had. I thought maybe I should be working
for her.
That illusion has come to and end. 3:1 is more normal for Brazil historically. Some say we are headed
to 3.5:1. I do not know. If we do trade there, it will be for a short period of time.
I am becoming more and more optimistic on Brazil. I know human nature is to tend to run the
opposite direction when there is crisis. I tend to be more like Warren Buffet and am attracted to the
things out of favor and be cautious when the herd is running in the same direction.
Back in 2004, Brasil ag land reached a hysteria phase with regards to demand and prices. The dollar
had been 3:1. There was much expansion and easy- high interest credit to fuel the fire.
In recent years, Brazil land has gotten expensive relative to returns. The cost of production is over
twice as much as back in 2004. Therefore, I have been hesitant to predict a new wave of expansion in
Brazil soybean area. Current prices are a godsend to those interior farmers who planted a soybean
crop in September/November looking at guaranteed losses. They are now seeing profits. But, they
must be careful as they plan ahead to 2016.
3:1 dollar makes Brazil land look mildly attractive again. The caveat to this is that wealthy people
tend to invest in fixed assets during these inflationary times. That tends to prop up prices and it
feeds on itself.
Overall, I am becoming more optimistic on Brazil. It is not that I know of some magic event around
the corner that will fix everything, but more so where we are at in the cycle. We are closer to a
bottom than a top. Brazil will likely go through some social and economic convulsions in the coming
months, but that will likely mark a capitulation in current events and then things will start to get better.
For those looking at Brazil, now is the time to be doing your due diligence. Do not wait for the
Economist or Wall Street Journal to tell you how great Brazil is. By then, we will be well on our
way again.
I will be in Mato Grosso the end of March on a crop tour and research mission.
April newsletter will have details of my trip.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
http://www.brazilintl.com/states/matogrosso/korymelby/kory-cs/km-cs.htm
Kory
For two to three years now I have been writing blogs and newsletters about what could go wrong
with Brazil. All I saw were problems. I was not sure what the catalyst would be for a correction
in the Brazilian economy. I knew that dollar at less than 2:1 and the otherwise irrational exuberance
was the illusion and not the norm. I never dreamed that Brasil´s golden calf company, Petrobras,
would be the domino that started a chain reaction throughout the country exposing so much
corruption, incompetence, and lack of planning in multiple sectors at once - energy,
manufacturing, water, hydro-electric,banking, and ag infrastructure/roads-trucking.
The dollar is now 3.05:1. My old friend has returned. After the trillions the USA has spent trying to
stimulate its economy, I never thought I would see 3:1 again. I lived through dollar 1.55:1 twice.
I was the poor gringo surviving while the Brasilians went on global spending sprees. It was other
worldly to live through. My maid drove a nicer car than I had. I thought maybe I should be working
for her.
That illusion has come to and end. 3:1 is more normal for Brazil historically. Some say we are headed
to 3.5:1. I do not know. If we do trade there, it will be for a short period of time.
I am becoming more and more optimistic on Brazil. I know human nature is to tend to run the
opposite direction when there is crisis. I tend to be more like Warren Buffet and am attracted to the
things out of favor and be cautious when the herd is running in the same direction.
Back in 2004, Brasil ag land reached a hysteria phase with regards to demand and prices. The dollar
had been 3:1. There was much expansion and easy- high interest credit to fuel the fire.
In recent years, Brazil land has gotten expensive relative to returns. The cost of production is over
twice as much as back in 2004. Therefore, I have been hesitant to predict a new wave of expansion in
Brazil soybean area. Current prices are a godsend to those interior farmers who planted a soybean
crop in September/November looking at guaranteed losses. They are now seeing profits. But, they
must be careful as they plan ahead to 2016.
3:1 dollar makes Brazil land look mildly attractive again. The caveat to this is that wealthy people
tend to invest in fixed assets during these inflationary times. That tends to prop up prices and it
feeds on itself.
Overall, I am becoming more optimistic on Brazil. It is not that I know of some magic event around
the corner that will fix everything, but more so where we are at in the cycle. We are closer to a
bottom than a top. Brazil will likely go through some social and economic convulsions in the coming
months, but that will likely mark a capitulation in current events and then things will start to get better.
For those looking at Brazil, now is the time to be doing your due diligence. Do not wait for the
Economist or Wall Street Journal to tell you how great Brazil is. By then, we will be well on our
way again.
I will be in Mato Grosso the end of March on a crop tour and research mission.
April newsletter will have details of my trip.
http://www.brazilintl.com/states/matogrosso/korymelby/kory_newsletter/km_newletter.htm
http://www.brazilintl.com/states/matogrosso/korymelby/kory-cs/km-cs.htm
Kory
Saturday, February 21, 2015
Wet week
Feb 21
Harvest was slow this past week in Mato Grosso. In some areas it rained
everyday. This is normal to have a two week wet spell this time of year.
It puts the 2nd crop corn planting at greater risk. One month delay in October
combined with another two weeks in February puts most of the crop to
be planted after the ideal planting window. Production potential is at risk.
Mato Grosso has a nice carryover of last year´s corn crop on hand yet.
The percent of 2nd crop planted as of March 1 will be important stat.
It will likely be the slowest planting pace ever.
With big toys and BT genetics, they can catch up quick.
The next Conab report will be out March 10th. I expect to see
cuts in Bahia soy crop as well as added cuts in Goias, Minas Gerais,
and Sao Paulo.
Spot soybean bids have been firm in Mato Grosso recently with weaker REAL
and demand for spot soy. Once the sun shines again, these bids will drop like a
rock.
Prices are better for soybeans than what I was thinking back in October.
Farmers will have a chance to sell some on a spot basis and then hold the rest
as an inflation hedge for later. They will make some money this year but the weak
Real means higher cost of production for 2016. This means growing pains ahead.
I doubt we will see any expansion in soy area for 2016.
The 2015 surge likely blew the top off the the recent Brazil soybean surge of
6 million + hectares in four years. Time to take a breather.
Argentina looking good, but they will likely sell their soybeans on their estate sale
and not in the immediate future. New government in early 2016 will force them
to hope for a better future and bet on the Come line. Come 7/11??? or Argentine
Craps? stay tuned..........
Harvest was slow this past week in Mato Grosso. In some areas it rained
everyday. This is normal to have a two week wet spell this time of year.
It puts the 2nd crop corn planting at greater risk. One month delay in October
combined with another two weeks in February puts most of the crop to
be planted after the ideal planting window. Production potential is at risk.
Mato Grosso has a nice carryover of last year´s corn crop on hand yet.
The percent of 2nd crop planted as of March 1 will be important stat.
It will likely be the slowest planting pace ever.
With big toys and BT genetics, they can catch up quick.
The next Conab report will be out March 10th. I expect to see
cuts in Bahia soy crop as well as added cuts in Goias, Minas Gerais,
and Sao Paulo.
Spot soybean bids have been firm in Mato Grosso recently with weaker REAL
and demand for spot soy. Once the sun shines again, these bids will drop like a
rock.
Prices are better for soybeans than what I was thinking back in October.
Farmers will have a chance to sell some on a spot basis and then hold the rest
as an inflation hedge for later. They will make some money this year but the weak
Real means higher cost of production for 2016. This means growing pains ahead.
I doubt we will see any expansion in soy area for 2016.
The 2015 surge likely blew the top off the the recent Brazil soybean surge of
6 million + hectares in four years. Time to take a breather.
Argentina looking good, but they will likely sell their soybeans on their estate sale
and not in the immediate future. New government in early 2016 will force them
to hope for a better future and bet on the Come line. Come 7/11??? or Argentine
Craps? stay tuned..........
Sunday, February 8, 2015
Nice rains, Conab, soy crop gets smaller
The soy crop is getting smaller. The truth is finally coming out.
Rains have returned to the Cerrado. In many cases it will be too late.
Yields have been nipped. Harvest is at full speed now in Mato Grosso.
I think that crop is also a bit smaller than some think.
IMEA will be out Monday with new numbers.
Conab on Thursday. I will send out special report to subscribers.
I have VIP consult on Tuesday.
Carnival starts this Friday for many. Brazil will be on cloud 9 from
Feb 13-noon Feb 18th. Whatever mode........
Car and ag machinery sales are off to a very slow start in January.
Slowest since the global crisis of 2009.
Corn crop is going in fast behind the combines.
Will better prices entice farmers to plant a bit more than expected?
Stay tuned.
Optimum planting window closes Feb 26th for many locals.
Water and energy will be the major buzz stories for Brazil in 2015.
Crisis of Biblical proportions for many.
Rains have returned to the Cerrado. In many cases it will be too late.
Yields have been nipped. Harvest is at full speed now in Mato Grosso.
I think that crop is also a bit smaller than some think.
IMEA will be out Monday with new numbers.
Conab on Thursday. I will send out special report to subscribers.
I have VIP consult on Tuesday.
Carnival starts this Friday for many. Brazil will be on cloud 9 from
Feb 13-noon Feb 18th. Whatever mode........
Car and ag machinery sales are off to a very slow start in January.
Slowest since the global crisis of 2009.
Corn crop is going in fast behind the combines.
Will better prices entice farmers to plant a bit more than expected?
Stay tuned.
Optimum planting window closes Feb 26th for many locals.
Water and energy will be the major buzz stories for Brazil in 2015.
Crisis of Biblical proportions for many.
Sunday, February 1, 2015
February starts on dry note
We had one good rain in January- that was it.
In Goiania we are running at about 10% of normal rainfall for the last
30-40 days.
There is more and more talk of water rationing for Rio and Sao Paulo regions.
The forecast for the next 10 days is for 100 mm. This will be nice and not one
minute too soon.
Soybean harvest will move into high gear now. The bulk of the crop will
be harvested in the next 30 days. Early yields were erratic-just like the start
of planting. Soybeans need water with heat like we have had. A common theme
among farmers is that it was too hot during podding. The yields are a bit less
than expected.
The heart of Mato Grosso is doing well. Large farms are averaging 57 sacs
per ha which is on par with last season.
The recent crop size forecasts of 95 mmt are still too high. Conab will be out
February 12th. They will decrease a bit. It will take 1 or 2 months before they do
the full monty again.
I am not there yet, but in the back of my mind I sometimes wonder if this crop
might only be 90 mmt. We will see who wins this year- agronomists or crop forecasters
sitting in the office looking at satellite images.
The Brazil economic situation is surreal at the moment. As ridiculous as it was to live through
Dollar/Real at 1.50:1 a few years back, it is becoming just as surreal in the other direction now.
Dollar hugging 2.70:1, inflation, everything is becoming more expensive all the way down to
a 12 inch Subway sandwich. Gasoline and diesel are on the increase as well as local taxes.
GDP is now shrinking and layoffs are occurring in manufacturing sectors.
Energy costs are set to rise as the government buys energy from Argentina and buys more
and more LP gas from Bolivia to run the generators to fill in the power gaps from lack of
hydro power. I wonder how much more the Brazilian public will tolerate?
I keep getting emails from young men in USA that want to work or buy cheap land in Brazil.
I know this blog is read by thousands and I welcome the emails. But, if one wants to participate
in Brazil, one needs to ask the right questions. How can I learn Portuguese? How could I do some
work study on a farm or business to gain cultural experience. What is tax system like?
Can I work in Brazil on a tourist Visa? What is cost of living like?
I cannot imagine wanting to come to Brazil without doing some due diligence first.
Subscribing to newsletters, reading expat blogs, chatting with other Americans here
that are veterans- no matter what the cost.
Brazil will eat you alive if you are not mentally, emotionally and financially ready for
her ups and downs. The happy medium does not last for long. You either live in AC or
DC here depending on the decade.
In Brazil you need to invest and believe in yourself. Brazil will not invest in you.
Brazil will take from you until you have had enough. You must first survive before
you can thrive here. Period .......
In Goiania we are running at about 10% of normal rainfall for the last
30-40 days.
There is more and more talk of water rationing for Rio and Sao Paulo regions.
The forecast for the next 10 days is for 100 mm. This will be nice and not one
minute too soon.
Soybean harvest will move into high gear now. The bulk of the crop will
be harvested in the next 30 days. Early yields were erratic-just like the start
of planting. Soybeans need water with heat like we have had. A common theme
among farmers is that it was too hot during podding. The yields are a bit less
than expected.
The heart of Mato Grosso is doing well. Large farms are averaging 57 sacs
per ha which is on par with last season.
The recent crop size forecasts of 95 mmt are still too high. Conab will be out
February 12th. They will decrease a bit. It will take 1 or 2 months before they do
the full monty again.
I am not there yet, but in the back of my mind I sometimes wonder if this crop
might only be 90 mmt. We will see who wins this year- agronomists or crop forecasters
sitting in the office looking at satellite images.
The Brazil economic situation is surreal at the moment. As ridiculous as it was to live through
Dollar/Real at 1.50:1 a few years back, it is becoming just as surreal in the other direction now.
Dollar hugging 2.70:1, inflation, everything is becoming more expensive all the way down to
a 12 inch Subway sandwich. Gasoline and diesel are on the increase as well as local taxes.
GDP is now shrinking and layoffs are occurring in manufacturing sectors.
Energy costs are set to rise as the government buys energy from Argentina and buys more
and more LP gas from Bolivia to run the generators to fill in the power gaps from lack of
hydro power. I wonder how much more the Brazilian public will tolerate?
I keep getting emails from young men in USA that want to work or buy cheap land in Brazil.
I know this blog is read by thousands and I welcome the emails. But, if one wants to participate
in Brazil, one needs to ask the right questions. How can I learn Portuguese? How could I do some
work study on a farm or business to gain cultural experience. What is tax system like?
Can I work in Brazil on a tourist Visa? What is cost of living like?
I cannot imagine wanting to come to Brazil without doing some due diligence first.
Subscribing to newsletters, reading expat blogs, chatting with other Americans here
that are veterans- no matter what the cost.
Brazil will eat you alive if you are not mentally, emotionally and financially ready for
her ups and downs. The happy medium does not last for long. You either live in AC or
DC here depending on the decade.
In Brazil you need to invest and believe in yourself. Brazil will not invest in you.
Brazil will take from you until you have had enough. You must first survive before
you can thrive here. Period .......
Sunday, January 11, 2015
Show Safra 163 2015 at Lucas do Rio Verde March 24-27th
I will be hosting an ag tour March 23 - 27th.
We will stop at the Ag show at Lucas.
Seed, chemical and ag machinery.
It will be a quick trip through Mato Grosso the week of.
Contact me at agturbobrazil@yahoo.com for more info.
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