April Conab report comments

Well, after 4 months of swimming against the tide, today Conab corrected
the Brazil soybean crop euphoria. This was never a 103 mmt crop. Never.

The weather situation this year was terrible. As of today, the weather is
still terrible. Hot and Dry.
Cotton and corn in Eastern MT, Goias and Bahia are suffering.

Is it a red alert yet? No

Could it be in 3 weeks? yes

Given the hell this years soybeans went thru, I am amazed we are even
talking 99 mmt yet.

FC stone adjusted their crop size lower to 97.5 mmt. This is what I have been
saying since Early December.

If it were not for Intacta II soybeans and Elatus fungicide, we would be looking
at a Brazil soybean crop in the low 90 mmt range.

IMEA will update their Mato Grosso soybean crop estimate soon. I think they will
be 27 mmt or slightly below.

The NE quadrant was ravaged this year. I feel for those guys. The NE tends to
have 7 year cycles of plenty and 7 year cycles of famine.
We are in year 4 of famine. I wrote about this in the November newsletter.

Being an agronomist and producer with experience with crop losses first hand,
it was obvious to me that the soybeans were screaming for help during these
120 deg days in December and February. They were cooked at the beginning
and cooked at the end. Poor seeds that were cooked in storage did not have vigor,
and some farmers cut costs by not spraying fungicides and insecticides while their
crop was burning up. I would have done the same thing. Screw it.

For those that had a good crop. My hat goes off to you. Those who got the extra rain,
have clay soils, and poored the money into the crop had some 60 sac soybeans.
I guess we can grow soybeans on 1200 mm of rain if they are timed right.
Those with sand, never had a chance. Brazil has a lot of sand in the frontier areas.
I have been to them all and helped shovel out a 4X4 pick up stuck in sand as though we
were in 3 ft of snow. Land like this is worthless in a year like this.
It needs to stay PASTURE !!!!!!!!!!!!! FOREVER!!!!!

The corn production forecasts as of today are reasonable, but if rains shut off
for 3-4 weeks, the 2nd crop corn is also overstated.

Below is a snap shot of the newsletter I sent out the end of January after my crop tour.

For those whoe want a free copy of a newsletter, please visit
www.Brazilintl.com

click on the button

Lula.gov.br

Welcome back old timer,

Whew, just in the knick of time. We needed you back. Brazil should be thankful that
a retired old man would be willing to come back and take the tough whipper snapper
job of Dilma´s Chief of Staff. Make sure your blackberry has a new battery. You
are going to need it !!!!!!!!!!

By the way old timer, there is a new app called Whatsapp. It is free.
This will help you communicate with your staff back in Cuba.
Now that the port in Cuba is finished, which Brazilians paid for,
USA entrepreneurs will soon be using it to import wheat, edible beans and Iphones,
into Cuba. Maybe you could use that squid-like charm of yours to get that railroad
built to Mato Grosso?

Your young, attractive protoge promised us this railroad back in 2010. During the
commodity boom, Mato Grosso doubled her grain production and we need a little help
out here. Maybe you could use your squid-like eyes and talk to the Chinese. They
might buy you a choo-choo train if you are a good boy.

The significance of today´s events are far reaching and long lasting. Subscribers
email and call asking what is going to happen next?
When you are dealing with people that make the rules up as they go and they do so
in an irrational, survivalistic manner, it´s damn hard to out maneauver these guys.

The markets do not like uncertainty. I felt quite confident that the recent rally
in Brazil stock market and Real was pre-mature. Brazil is good at making the wrong
decision. They did so with breath taking certainty this week. Double down on what
does not work. You are down to your last few chips and you go all in knowing you
must get a black jack just to get back to even.
As I write this, the president of the central bank says he is likley to step down
without fiscal responsibility.

The risk is if the country descends into chaos. There is rurmor of a country wide
voluntary business shutdown in March 30th. This is a protest to the current
shananigans.

The question now is: Why impeach Dilma? In essence she is not President anymore.
She has wasted her mandate and gave what was left of it back to her mentor.
With the mentor basically senile, it seems to me he will burn off what is left
of his personal politcal capital in coming months. He has said no to fiscal
reforms and social benefits. Keep the poor fed, some beer, and games to watch,
they will allow you to stay in power.

Olymics are coming up. Nothing is ready. How do you have impeachment hearings
and Lula in the background acting like a victim while we have an international crowd
to impress?

Nothing happens in Brazil as quickly as we would like. When I hear people talk
that she will be gone in a couple months, that tells me expect a year to go by.

What could change this? We need another national protest double the numbers
we viewed last Sunday. That could get the ball rolling. Its in the Brasilians
hands. More of the same? or will 1 million descend on Brasilia one weekend
to end this? Notice in the protests that most everyone was old. Not very many
young folks. Many were at a rock and roll concert all weekend in Sao Paulo.
Sex, Drugs, and Rock and Roll, no problems here. Such is Brazil.

There are two very distinct scenarios unfolding for soybean farmers in both
hemispheres.

If the current lack of fiscal restraint continues, the Dollar:Real will continue to
widen and give incentive to Brasil farmers to keep planting soybeans at any price.
With Dollar 5:1, US$ 7.00 soy at CME is workable here for 2017.
Not easy, but workable. Imagine a 4 billion bu USA crop this fall??

If Dilma and Co. fails and impeachment proceedings continue, look for the
Dollar:Real to trade 3.50:1 at that time. This will cause the Brazilian
farmer to hit the pause button and stand pat for a couple years until
margins return to their favor i.e. lower costs of imports etc.

Add into this the Feds decision to keep interest rates low.

Add into this the USA political circus. What if Trump wins?
What if Trump wants to play hard ball with China? tax imports?

How would China respond? Cut back on USA imports of USA soy?

My guess if there is even a hint of Trump being President this fall,
we will see Chinese trade and infrastructure teams literally living
in Brasilia and Mato Grosso.

Trump wants to build walls.
China will pay for, build, and pay a surcharge too boot for
them to access protein from Brazil with more ease.

Exciting times ahead.

1. Dilma gone= lean times for Brazil farmer but save the country.

2. Dilma/Lula hang on for a year- Dollar is 5:1 and soybeans trade 7 bucks
in Chicago we have a USA ag crisis on our hands. (kinda need a drought wink wink)

3. Trump is President, walls go up, stronger dollar, and trade wars start.
Also causes USA ag crisis and plays into Brazil ag no matter who is President
or what the economy is. It won´t matter. Full throttle production.

4. X factor

Trying to figure out Brazil today is like playing 3 dimentional chess with Spock
on Star Trek. And the table is rotating too ........

More later

Kory











´

Politics, Soybeans,Drought,FX and Frank Underwood $$$$$$$$$ Game Changer

Brazil farmers and commodity funds were caught off guard this week.

We had been trading about 4:1 Dollar/Real the previous two weeks.

With the Brazilian farmer about 60% sold on his soybean crop combined
with some regions losing production on a daily basis, he is holding
on to remaining production using it as a currency hedge.
The idea among locals is that we should be trading 4.25:1 by now given
the political and economic instability.

Out of the blue, the Federal Police have illegal campaign contribution proof
on Dilma and they took Lula in for questioning on kickback schemes from his
administration and operation Car Wash involving Petrobras. What did he know
and when did he know it? Reminds me of Iran/Contra and Reagan Admin.

It was like being in an episode of "House of Cards" Friday. I was flipping back
and forth between NetFlix and Twitter updates on the state of the Brazil politic.
I kept asking myself, if Lula was Frank Underwood, what would he do next?

The stock market and FX market exploded higher thinking that the Feds finally
have the Goods on the PT.

I stopped by my local butcher this morning. He hung his head low. I am sad he said.
I am embarrassed. I voted for Lula two times. My god how they have been stealing
from us all this time. I did not want to believe it, but now I have too.

Lula exited his term as president with 90% approval ratings. He will die
being known as a common criminal now. Reminds me of the Madoff scandel.
It was all an illusion.

The FX rallied to 3.65:1 before selling off back to 3.75. No one was expecting
this !!! Domestic soybean prices are selling off at a rate of 2-3% per day.
This is the worst nightmare for the Brazilian farmer. A static/weak CME and a stronger
REAL- they cannot control their risk and protect cashflow gross revenues.

It was fun on the way up, CME at 9 bucks and weaker REAL. They did not need to do
anything. Now we have had a 9% drop in FX and CME rallies maybe 2%.

Part II

Many videos have come out of Bahia, Maranhao, Piaui, and Tocantins. The situation is not good.
We have seen this movie many times. We have a state that produces X and commentators
come out and talk of 10-20-30% losses. Many times we hear of losses of 1-2 million tons.
In the end, the loss of production ends up being about 500,000 tons.

Is it the same thing this time?

The timing is bad to be optimistic on production. Late planted soy in December and January
are at high risk. The soils tend to be sandier in the NE and have less staying power to hang in there.

We have a Conab report on Thursday March 10th.

Conab, as with USDA, is always compiling data from 30 days ago. So Conab would be putting
together data as of mid-February. Until then, yields in Mato Grosso were coming in better
than expected. So we could see an adjustment higher in the interim in some states.

From mid-February until March 5th, we have seen a rapid deterioration in the soy crop in
the MaPiToBa region. This extends across northern Goias and into the Eastern 1/3 of
Mato Grosso.

Recently, we have seen various cropcasters increase their soy crop size potential for Brazil.
The ranges have narrowed to 98.5 mmt to 101.5 mmt.

What do I expect the next 30 days. I think we have seen the high water mark for Brazil
soy crop size. The question will be if Conab makes further adjusments lower in March
or do they stand pat and then adjust lower in April.

The point being, that if Conab would increase slightly in March, they will likely decrease
in April and May. The markets will anticipate this.

The last 33% of the Mato Grosso crop will have very low yields. This will affect the final tally.
MaPiToBa could be 500,000 tons to 2 million tons overstated as of today.

The Parana crop will likely be same size as last year. This means a 500,000 to 1 million
ton cut there.

Mato Grosso do Sul has suffered some losses due to too much rain at harvest. It has been called
a 7.5 million ton crop, but will likely edge lower to 7 million ton in time. This is a tough call
because some producers harvested their best crop ever in the state.

Rio Grande do Sul has a very nice crop on deck. Their production could actually be understated.

In closing, with Friday´s market action in CME and FX, we will likely continue with the soy rally.
Brazil farmers will not sell the balance of their production.
We will likely see some weather premium come into USA market if the hot and dryish pattern
continues.
A rally to 9.20 seems likely now. Could we see 9.50-10 bucks by June?
yes, I think we can.

I think the talk of 8 dollar soy has been negated now by the change in FX and the shrinking
Brazil crop size. The last 10 days have taken its toll in some regions.

Thus, with a weekly reversal, and technical breakout(maybe next week), the fundamentals ranging
from lower yields from later soy, FX, CME rebalance, domestic premiums, and spring weather
for USA, should allow us to stay above the 8.50 lows just put in and the trend should be
higher and not lower in the coming weeks.

I think we are putting in some very long term lows here. I am mildly bullish as we get through
this harvest process. From May forward, higher prices should be the theme.

Thank you for the new subscribers in recent weeks.

I will be at the Lucas do Rio Verde Ag show the end of March.
I will attend the ground breaking for the new Corn ethanol mill there.

April newsletter should go out on March 31 or April 1.

Clients that signed up for the 3 month VIP trial period back in December have now
renewed for 1 year.

If you have interest, drop me a note, maybe we can work something out that fits your
needs.

Kory

Feb 20th Blog Soy, Corn, Zika, Econ, Prices, Export taxes etc

It has been awhile since I have updated blog.

I have been busy. Some work related and other personal.

Everyone wondering about crop size. Me too.

Lately yield reports are quite good. There some 60 sac/ha or 54 bu/acre
soybeans in Mato Grosso and many other parts of the country.

I do know of a couple fields that have yielded 75 sacs/ha. Intacta soy
and a little luck with rain. I still hear and see of fields yielding 20 sacs also.

SW Goias state seems to be in good shape compared to previous two dryish years.
(Many are reporting on Goias and MGDS applying export taxes).
In my opinion, this is a non-event. If they export too much some excise taxes
will kick in. But for now, steady as we go.

MGDS is coming in with a great crop. Rain makes grain.

I have heard of some 80-90 bu/acre soybeans being harvested in Parana.
These are small fields. But, none the less- damn impressive.

I still see photos of short beans in many locals. There is still a boat load
of average soybean out there yielding about 40 bu/acre.
How does this affect the tally at end of the day??
I still lean to the conservative end of any estimates out there.
It is an agronomist/farmer thing- nothing scientific.

We have millions of hectares of soybeans planted in November and December
and a few in January also. We are in uncharted waters as to how normal
cycle soybeans will yield out of the normal window. They won´t freeze- wink wink,
but Sun could surprise us either up or down on final yields as time goes on.

What will Conab say March 10th? God knows....
The litmus test for me in February was if they would print a number
above or below 100 mmt. If above 100, which it was, they are still
optimistic. We production bears maybe wrong....

But,

What if they print below 100 mmt in March?

May soybeans seem to want to breakout to upside. If the crop is
a 100 mmt+, why are beans wanting to trade higher?

I have seen technical analysis showing a solid argument for 7.90-8.00
soybeans in the months to come. Even 7.50

I have seen wave counts point to 10 bucks if we pop out of this consolidation
range.

I am of the mind since November that 8.43-8.47 are solid lows.
But I think getting on top of 9.20 will also be very difficult given
the size of Brazil and Argie´s crop.

We had Brazil analysts saying Mato Grosso crop was gone in
late December and expect 12.50 soybeans by February. The USA
does not have the supplies to meet Chinese demand. I said Huh???
All I see these days are 450-500 and even 650 million bu carryovers
in USA going forward. Lots of beans.

I have read that if Brazil soy crop is only 97 mmt,in theory, Brazil would
run out of soybeans later in the year assuming record crush and exports.
(This is mildly bullish longer term if we can get this crop size below 100 mmt)

2nd crop corn area will be large. I think it will take away from the
680,000 ha of 2nd crop soybeans that were planted last year at this time.
The size of Mato Grosso and Brazil 2nd crop corn will depend on May rains.
The crop is going in late. They have been lucky 5 years in a row. Can they pull
out another one?

I have posted a fantastic report from IMEA on my website.
It is the 2025 Outlook in English. It is really really GREAT.(trumpism)
I will put together a newsletter around this with my comments and opinion
as to how realistic it is. But every producer in the world should have this
file memorized. If we stay weak on Argie and Brasil FX, these guys can keep
expanding as long as credit and infrastructure are there to move the stuff out.

www.brazilintl.com

I thought I was going to be in Rio Grande do Sul this week and then Mato Grosso.
But Zika news has caused my client to cancel his tour for the time being.
Probably a wise move but I am too numb to worry about it. 15 years here you will
realize something or someone else will kill you before a mosquito does. This is
also Viking mentality.

Economy is shrinking. My John Deere dealer buddy is now in training with JD
construction. He left ag sales for now. Small mechanic shops and salons locally
are closing do to lack of movement. Reports of Sao Paulo real estate is down 20%.
Seems to me a 50% correction would be a nice start.

The weather is hot and dry again. This is strange for February. The soil has enough
moisture to germinate and grow like crazy. The end of April and early May I will
be on the edge of my seat again just like at Christmas. How much did it rain???
Did you get any??? and the 2nd act will have begun.

January 9 blog update

Rains have come, now what?

Early yields in Mato Grosso are from 19 to 49 sacs/ha.
17 to 43.5 bu/acre

What do we do with that info? 1% harvested

Many say they have 60 sac soybeans to harvest end of January and early Feb.
I am sure there will be some.

I look at it like this.

Mato Grosso, in a normal year, is 80% good to excellent all the time.
20% has a drought issue or too much rain at harvest or some such issue.

This year, that is inverted.

80% of the state had problems at some point or another and 20% of the
state was good to excellent.

"Some are still planting" !!!! This is like planting soybeans in July.
Northern hemisphere

I will do my personal tour and report to my subscriber list directly.
I do not plan to post much here in the coming weeks.

Early Parana yields are not good. About 19% less than last year same field basis.
1% harvested
Test weight is the issue- there was no Sun thus no photosynthesis.
Later soy is being attacked by rust. If you used tier one fungicides such as Elatus,
(Syngenta product)you are OK. If you used older, cheaper fungicides,
the rust is breaking through.

Conab crop report will tell the tale on who has been naughty and nice.

December Conab started with 102.5 mmt.

If they drop only 1 mmt on Tuesday, the Brazil soy crop will be big.
Congrats to those who were not swayed by drought talk and images.

I personally expect them to cut production to sub-100 mmt and stand pat
for 1 or 2 months until more data comes in.

It will be a long drawn out harvest. We will have data coming in yet in May.

I will be traveling a lot the next 7 weeks. Mato Grosso twice and Rio Grande
do Sul also.

I will be directing my reports to subscribers only in the near future.
100% renewal rate for 2016 and many new subscribers also.
Many have been with me 10 years now. I do appreciate it.

It is time to spin the soybean roulette wheel:

Red or Black?

Red 99 or Black 101 ;>)

or maybe "snake eyes" is the better analogy
Craps- We are all wrong !!!!!!!!!!!!!!!!

Kory´s private Mato Grosso crop tour for subscribers and VIP clients

I am planning my own private crop tour of Mato Grosso starting January 20th.

I will be on the ground for the first of the soybean harvest and evaluate
the middle planted soy potential at that time.

I will start at Sinop and work my way back and forth 100-200 km deep
on each side of BR 163. I will do this all the way to Nova Mutum area.

This area would encompass circa 13 million tons of soy production potential.
We should be able to get a good grasp of crop size by then.

There is too much BS in the media these days. It is hard to know what
to believe.

I plan to send out at least 4 newsletters in January.
One a week on average.

I will send crop report updates direct to subscribers and my VIP
clients for their use.

The link for newsletter is:
http://www.brazilintl.com/newletter.html

The link to VIP consulting service is:
http://www.brazilintl.com/vip-pro.html

One can also access these links at the top of this blog page.

This includes follow up telephone and email reponses to querys.

If you have any questions or want to discuss options drop me an email
at agturbobrazil@yahoo.com
and we will set up a consult time to chat about options.
I am open to suggestions.

The newsletter price is firm for one year.

I would be open to a quarterly retainer at the VIP level for those
that want to monitor harvest conditions for the next 3 to 6 months and
not all year, for example. Renewal each quarter. For new clients only.

My telephone number is: 011-55-62-3286-1506
cell 011-55-62-9912-1085
WhatsAPP also

Happy Holidays

Kory

December 18 blog update

After posting recent dead soybean videos, there has been much demand for more comments.

I appreciate the interest, but I also need to balance what I post and what I send out to VIP clients
that are counting on an "edge" for their business.

Weather:

I am here in Goiania, Goias. This season we have had "3" decent rain events. They came as thunderstorms.
Everyday is a blue, sunny sky like we are in the middle of the dry season. For soybeans that have received some decent rains or have access to irrigation, this is paradise. Moisture in soil and sunny. Lots of energy, no disease, and deep roots. Each state in the Northern Arc has some spots like this.

Normally at this time of year, starting in early November, we tend have slow, sleepy, all day rains.
We do not have that anymore.

This bubble of HIGH pressure covers Mato Grosso, Goias, and MaPiToBa.
These regions encompass about 50% of Brazil´s soybean production.

We are now trying to figure out what loss factor to plug into this region.
5%,10%, 15% ???

On Monday, December 21, the first two soybean fields in Mato Grosso will be harvested.
Their yield will be 20-25 bu/ acre. 50% less than normal for super early soybeans.

The forecast this morning is for another 4 days of hot and dry before a chance of rain arrives
next week for the regions mentioned. Some forecasts call for 15 mm. Others are thinking 75 mm
for the coming week. Anyone who can get 75 mm next week will be very happy. Anyone who gets
15 mm or zero next week will need to clean out his pants.

In this upcoming period of late December and early January, we have " millions" of hectares of later
planted soybeans that will start grain fill. The rainfall in the coming days will be of epic importance.

I have heard reports of 65 bushel soy near Sinop that will now yield only 25-30/bu/acre because of recent dryness. What if this expands to the middle planted soy?

A friend of mine in Parana has applied fungicide three times to his soybeans. His soybeans are nice.
In the next two weeks, his soybeans will be in the bag so to speak. The lower leaves of his soybeans are covered in rust. He is worried about the later planted soy in his area. With the wet weather they have been having, there will be no way to stay ahead of the rust. Thus yield loss from normal is likely.

Yesterday on Ag TV Brazil, they interviewed a soybean analyst. He is thinking that by February we can see US$ 12.50 soybeans in Chicago. I started to cough and sputter. I am a mini bull at this point, but not that bullish.
This tells us the hype has started.

We have plenty of global supplies to chew through. We will not run out of soybeans. But the market has not factored in adequate weather premium into this Brazil crop.

We needed to get through the Argentine devaluation that was outlined in the Decmeber newsletter.
Thursday´s reversal now sets the stage for further gains in the near future.

9.00, 9.50? maybe 10 bucks yet? yes it is possible with a dry pattern continuing into January.

What to watch for:

There are forecasts for "three" (15 mm) events for Mato Grosso from Dec 21 until Dec 31.
If that is all that comes, katie bar the door.

If the core region can get 75 mm or about 3 inches in the near future, that will save some
potential. It will not reverse the damage to date, but it will buy some time for these guys.

15 mm or a 1/2 an inch will be nothing more than steam. It will help a soybean crop for a few
minutes, not days.

Merry Christmas to all

kory