Saturday, September 17, 2016

Sept 17th blog update China visits

Hot and dry at the moment.

Forecast is for rains to start end of Sept. The 30 day forecast
is for irregular rains. We will need to watch this as per if this
affects planting. At this time, not a big deal.

I am working on Oct newsletter. I have some new corn production
graphics to include. As I stated earlier, the headline for the season
will be the amount of 1st crop corn that gets planted and the lack of soybeans.
Soybean area will look very much like last year.

The impeachment process went smoothly and now it looks like they will nab
former President Lula also. Compared to USA politics at the moment, Brazil
looks rational at the present time.

Brazil sure seems to want to open itself up for investment again.
Foreign ownership of land and many infrastructure projects are all on deck
to be bid on by private sector.

President Temer and Sec of AG, Blario Maggi, have spent time in China the
past two weeks. Blario continued onto Vietnam also.

We have had Chinese delegations in Mato Grosso, Tocantins, and Goias recently.

One must wonder why?

It seems like Brazil is serious this time about letting foreigners participate
in infrastructure ptojects. They are printing the consessions to be bid on both in
English and Portuguese. In the past, so many things i.e. details, got lost in translation.
It does no good to bid on a railroad if the environmental impact study has not been
completed.

President Temer and Blario Maggi remind me of the Smokey and the Bandit theme song,
"we have a long way to go and a short time to get there."

They have two years, maybe less, when one considers the election politics of Brazil
for 2018. They need to make hay in 2017 or we will look back in 2.5 years and say they
were nothing but place holders or bench warmers for the new team to come in early 2019.

This new team will be a wild card. We could swing hard left or hard right again depending
on the economic temperment of the populous at that time. At the moment, most everyone
is hurting. Sales, production, and services are much lower than three years ago and at the
same time everything costs more. My electricty bill made a new record high for Sept.
10 years ago the bill was 150 and now it is 800. I am not sure how the average joe
can keep up with that.

There are reasons to be optimistic. But so much of this optimism depends on China, FX,
and cheaper credit in the future. If there is a hiccup in any of these factors mentioned,
it ripples through the whole economy and another year goes by without much change.

Kory


Sunday, August 14, 2016

Screenshot of April newsletter 1st corn area etc

Here is a screenshot from the April newsletter looking at the potential for acreage shift for 2017.

I am monitoring this.

Starting Sept 1, I will be adjusting my hourly and VIP rates higher.
10%-20% increases.

Anybody interested should drop me a note ahead of this and we will work something out.

Corn has started to be planted in RGDS and soon SC and Parana states.


Thursday, July 28, 2016

July 28th blog post

A brief blog post for early August.

I am in disagreement with those who think we can see an expansion of soy area
in Brazil for 2017.

It is more of a gut feeling I have lately. I am looking at domestic corn market,
(at near record highs),lack of credit/or very expensive credit, re-negotiations of contracts,
(land rent,physical delivery contracts, etc),trucks standing waiting to load
corn(lack of supplies), packers slowing down slaughter pace, crushers shutting down early etc.

And weather ......

I am expecting a late start to Cerrado states planting. If this is the case,
later planted areas, i.e. sandy areas, will likley to switch to corn.
1 crop only

Southern Brazil farmers have the economic incentive to flip to corn.

If its only 500,000 ha, Brazil will likley stand pat on soybean area
for 2017. Potential is there for decent crop and good yields.

If for some reason, the switch starts to look closer to 1 million ha from
soy to corn for 2017, expansion will not outrun switching and on a net net basis
Brazil will drop in overall soybean area.

This is not in the main stream.

I have outlined this in recent newsletters and special sendouts.

This is the "sense" I am getting today.

Better to do 1 crop correctly on the right ground than try and push
two crops and get burned on both.

www.brazilintl.com

Kory

Saturday, July 2, 2016

July 1, 2016 blog

Dollar has traded 3.20:1
Soybeans have traded R$ 85.00/sac in Sorriso, MT
Corn has traded at record highs but market has now calmed
Edible beans are at record highs
Credit is tight, but multi-nationals are filling the void
Beans and corn are moving north to Amazon
Panama canal can now handle 100,000 ton ships of soy to China
Northern Hemisphere has record low interest rates while Brazil maintains 14.25% and
still can´t nip inflation in the bud.

If you would have asked me in February or early March where to Dollar:Real would be today,
I would have said 4.25:1. With the cost of living and utilities on the rise, dollar at 3.20:1
just does not seem possible. The only positive for this scenario is that a stronger Real tends to
hint at higher than average soy prices going forward.

In mid June, spot soybeans made a high at R$ 85.00/sac in Sorriso, MT. Recently they have
dropped to R$ 77.00 sac. New crop bids are in the mid-60´s per sac for March 2017.

Spot corn prices have dropped back to R$ 26.00/sac in Mato Grosso. New crop 2017 contracts
are being written for about R$ 21.00/sac.

Much talk lately of a few big farms in bankruptcy protection. This is more of a cashflow
problem than and overall debt problem. With the stronger Real and decent cashflows for 2017,
the situation is workable. With soybeans at or near US$ 12.00/bu, this is a lifeline
for many. If soy was 9 bucks today and sinking, I might be a little more negative.
For now, I remain optimistic.

The underlying problem for Mato Grosso and MaPiToBa regions are sandy areas that have
been brought into production in recent years. Anyone with sandy land last year,
that missed a rain, felt the lose in yield potential in soy and corn.

We can compare breaking up new lands and pasture to that of CRP in USA. The land has been lying
idle for 10-15 years. It needs heavy dose of fertilizers and lime.
It takes time for the nutrient saturation to build up in the soil profile.
Acidic soils cause aluminum toxicity. The more the
roots go searching for water; the plants literally grow themselves to death.
This is what happened last year in the drought areas. Satellite images
were showing green vegetation, but the plants were dying not only from lack of water,
but of toxicity. Soybean plants were experiencing their
own form of a sub-prime housing meltdown.
The plants formed pods but there was no one living inside them.
The insects came, ripped out the plumbling, and left. A negative feedback loop started.
The farmer saw his crop deteriorating by the day, so why spend more money on a dying crop?
The probability for disaster became a reality with or without rains.
The stage was set for lower and lower yield potentials very early on in my opinion.
A non- plant scientist missed that factor.
They assumed when rains came, all was peachy, and in many cases, it did not matter.
The plumbing was already at the junk yard and insects were at the beach having a Corona
talking about what a good year it was. "I have never had so much insect sex in all my life."
"I have laid more eggs than my grandparents could ever imagine." They would be proud of me.
Whenever I came to an Intacta soybean plant, I jammed my eggs in there but good.
I have faith in my children. My kids are going to be BT resistant is no time.
The first few might be a little bit retarded, but I know they will grow out of it.
Bring me another Corona.
Cheers Mate !!!!

When breaking up new land from degraded pasture, the operator will invest heavily the 1st year.
Likely little or no rent will be paid. Year two, he will pay 3 or 4 sacs of soybeans.
By year 3 or 4, the land owner wants his 8 or 10 sacs of soybeans for rent.

This is the time frame we are coming into for many of the new surge areas that have brought
us to the 100 million ton soy crop potential threshold. Can we break through it in 2017 is the question?
In a perfect world, yes. But

Many operators are threatening to give back the land they have recently brought into production.
They cannot afford a 8 or 10 sac rental payment for 2017. They are trying to keep thier costs
under control after accumulating lots of bills the last two seasons.

I think the land will be planted by someone. It will not be abandoned. There is too much potential
for 2017 to make money. Or in some cases make it all back. "All in on Black 17"

Fertilizer is cheaper and sales are zipping right along. We have the new issue of no planting of
a 2nd crop or anycrop crop of soybeans beyond Dec 31, 2016 in several major soy states.
With cash corn prices firm, a few may try to invert their planting and plant either edible beans
or corn 1st and then get that 2nd crop of soy planted by New Years. Basically that 1st corn and
soybeans will be counted as a first crop by Conab. If this would gain momentum, it makes for
wide swings in planted area estimates from beginning of season to end of season in 2017. I am
on top of it.

IMEA recently published that up to 34% of the January-May soybean shipments are now going
North to Amazon. This is an impressive paradigm shift. Add in the opening of the Panama canal
to 100,000 ton boats of 3.7 million bushel of soybeans per load, damn, the world is changing!!!!!
Good thing the Amazon is deep and wide !!!

The biggest risk factor in coming months is the FX. The Dollar:Real at 3.20:1 does not seem right.
Brazil needs a 3.50:1 or weaker currency to export her way out of this recession. At sub 3:1,
Brazil loses all her perceived competitive advantage on exports of many different commodities and
products.

The Olympics are on deck. It seems to me it will be a flop.

Zika concerns have gone quiet. I would not let this be a sole reason for not coming down.

Impeachment process seems to be moving forward, but expect some legal positioning and appeals
to Supreme Court in August to try and gain pole position by one side or the other.

Dilma says she is open to new elections to avoid this lack of leadership vacuum. If only there
was less EGO one year ago, the public would have accepted this offer. Today, the middle finger
goes up.

When she donated 650 tons of edible beans to Cuba at the end of 2015, and today, we have
pinto beans trading at a record high price. Even the poor folk shake their heads.
She is an economist?
It has not rained in months, and she giving away our staples. Public is pissed off and distraught.

Foreign ownership of land issue is stalled in Congress. The new President, Admin, and Minister
of Ag are all in favor of defining the rules for foreign funded Brazil company to function and
new increased limits. Some say as high as 100,000 ha per entity. I think we will get it.
But it takes time.

I know there is much interest in Brazil ag info in various sectors. I see the number of readers
of my blog and posts in the thousands. There are other sites out there doing the daily ag news in
English. As we start a new crop year in Brazil, I will be doing less blog posts and focus on my
subscribers and VIP clients and my own portfolio. I am happy to offer guidance where I can to
those really interested in understanding Brazil.

I have clients who have just renewed for thier 12th year with me. I am truly appreciative.

I will post the bubblegum of a soybean planter or combine working in a big field as I receive
them from time to time on Brazilintl Facebook page. If that is all you need. enjoy.

But for analysis on what this all means and where we are going, do not look for that
on the blog. That will be for the subscribers.

You know where to find me,

Have a great weekend and summer.

* Early 1st crop corn will attempt to be planted in certain locals as
early as August in Brazil. hint hint

Kory









Thursday, May 26, 2016

Mid Year Turn

Seems like many things are flipping polarity from what we have become accustomed to
in recent months.

For months we heard the SA soy and corn crops would be big.
In the end they got smaller and continue to do so.

El-Nino is now offically neutral and flipping to La-Nina later in 2016.
This means SA weather will be 180 deg opposite last year´s experience.

Soybeans are trading 11 dollars in Chicago. Soybeans are trading at a
record high price in Brazilian Reals of $91.00/sac.
2017 prices are much the same. These prices in Reais are higher than
when soy was trading US$ 18.00 in Chicago Sept 2012.

Fertilizer sales are outpacing last year´s volumes. Lower FX
is pulling sales forward.

We have a new interim President. Everyone said that after Dilma
is gone, the Dollar:Real would trade 3.30:1. Yet today the
FX is closer to 3.60:1

Dilma said opposition was fabricating numbers saying the economy
was worse than it is was and using this as a reason to start the
impeachment process. Dilma is an economist. To the chagrin of many,
the budget deficit projected prior to impeachment was too small.
The number has jumped from R$ 100B to R$ 170B after the impeachment
votes. More and more money is needed just to maintain par muchless
come up with stimulus $$$.

We have chickens dying from starvation in Santa Catarina. We have
chicken packers shutting down in Parana May 31. Many coops are
90 days late paying their producers.

We have Brasil JBS wanting to domecile themselves in Ireland to have
cheaper access to credit. JBS made billions on their currency hedges
in 2015. Processing anything seems almost a secondary business now.

The new administration is looking favorably at overturning the limit
on foreign land ownership.

China has made some initial purchases in Brazil Agri-business,
and I would bet that is just the beginning.

The rains shut off on April 13th this year. Those who pushed the
envelope and planted 2nd corn into March 5th-10th like the previous
five years, now have corn of the cobless variety. Zero

This was forecast by many in late 2015. But with corn contracts at
R$ 18-R$ 19/sac and a short soybean crop, the will to keep planting something
to make up for losses overrode reason.

2nd crop cotton losses will be 30% on a widespread basis.

The current 2 dollar+ rally in soybeans has come at the right time
to help producers who took it in the shorts this year. They have some
positive cashflows to work with to deal with creditors and bankers
for the year ahead.

For the last 6-12 months in Brazil, it has been nebulous to try
and see the future. There were so many possible scenarios that
if one event happened it would unleash one set of events. If another
event happened, the end result would be 180 deg opposite the other possibility.
It has been frustrating.

But as we make the mid year turn, I feel like I see the sun is starting to
peak through the clouds as the fog slowly lifts. There are still many
things that can happen to drop the veil over us and keep us lost in the fog.
However, given the rise in prices, announcement of govt ag funding plan,
stable FX, and generally a peaceful transition of power, I think we
can start to be more optimistic as we go into fall.

Many will argue that I am 6 months to 1 year too early on this.
I may very well be.

But specifically the ag sector, we can see tremendous possibilites for
profit in 2017 with decent weather and production.

Sugarcane and coffee are good. Edible beans are at record high prices.
Soy and corn are at record high prices.

Barring any sudden changes in govt, riots, and FX moves, I think we can
start to see the Ag economy on a nice upturn that will seep into the
industrial sector and give us some positive GDP and growth again in Brazil.

I hope the govt does not start to tax soybeans either at a state level in
Mato Grosso or nationally as per an export tax. Both have been proposed
but so far do not have legs. If they start to tax the one sector that
can get them out of this mess, I may have to modify my optimism.

I believe we are in the mid-curve turn in Brazil. G forces are kicking in
and we know we are about to change direction. Let us hope we don´t hit the wall
as we pull out on the straightaway.

Thank you for all the renewals of late.
Thank you for your confidence.

For more info visit www.brazilintl.com

or drop me a note at agturbobrazil@yahoo.com




Friday, May 6, 2016

Politics, weather, 2nd crop corn, China, Maggi, and look ahead to 2017

There has been much in the news lately. Many things have been spun
as a positive development, but if one looks at bigger picture,
it is a sign of the times and in many cases a "House of Cards."

The vote in the Senate to remove President Dilma while the impeachment
trial starts will happen on May 11th. At this time, it looks like she
will step down for a bit. She could call for new elections and interrupt
this process, but she remains defiant.

Today, the Supreme Court ruled that the Speaker of the House step down
on corruption charges. He hid a few million in Switzerland. We have known
about this since late 2015. One must ask why this ruling came after the
impeachment vote in the House three weeks ago. Would the vote have been
different three weeks ago if he was charged prior?

We have news tonight that Senator Blario Maggi might be the new
Secretary of AG if Temer, the Vice President, assumes office next
week.

All of this is happening while the Olympic flame is making its rounds
through Goias state and Brazil in the coming weeks. People are standing in
line waiting for H1N1 vaccine to show up and yet the Olympic facade progresses.
I talk to business owners and they tell me their traffic is down 50% and their
costs are up 30% in recent months. Rent, water, energy, taxes, gas, labor
are all higher. Many are fit to be tied.

Farmers in Goias state are extremely worried. It has not rained in over a month.
It looks like dry season has kicked in. Brazil weather guy says no rain in the
Cerrado until into October. When it does start to rain, it will rain steady.

Ranchers are already liquidating cattle herds. What will it be by September?
Dead pastrure, fires, lack of water are all very much on deck in coming months.
Chickens are coming to slaughter light. All a sign of lack of feed.
Corn prices are at record high prices in domestic currency. Soybeans are
at or near their record highs.

If one reads the headlines this week in Brazil, one would assume the
2nd crop corn is 50% gone. This is not the case on a national basis.
But in some states like Goias, Eastern Mato Grosso, Minas Gerais,
parts of Mato Grosso do Sul , Sao Paulo and Northern part of Parana,
this is very much the case. 50% shot.

Much of this corn is pre-booked for export. Many of these orders
need to be canceled and originate from USA. The kicker is much of
Brazil corn goes to Middle East. Will Iran want corn from the
Infidel´s? Not sure..... If I were Muslim, I would buy all the corn
I could before the Trumper says I can´t have any.

This dovetails into the Chinese purchase of a Mato Grosso grain
merchandiser. Is it as simple as opportunity presented itself and
a willing buyer found a willing seller? or is there more to it?
Yes, the grain merchandiser is going through a restructuring.
Yes, the Chinese have tried for years to buy land, build soy
crushers, railroads, ethanol mills, and buy soy direct. All efforts
have failed. They could not find a dance parter. Now they have access
to direct soy, port access, and in the future- rail service.
I cannot help but think that Trumps recent rise to top of Republican
ticket has sped up their decision to enter the Brazilian and Argentine
markets with gusto. They need access to protein in the future irregardless
of trade issues with USA. There are too many unknowns in the new political
environment we live in. It is time to hedge some bets and put our money
where are mouths are- quite literally. The new China/Brazilian/Gaucho
marriage will be interesting to watch. The Chinese do not like Polka
and Gaucho´s don´t eat Chinese. However, in my own experience, I have found
that a 1/3 Japanese/ 1/3 Italian/ 1/3 Brazilian female to be near
"Perfection". Trumper would approve

Where is all this going?

IMEA earlier in the week threw me and many others a curve ball.
They have been using satellite imagry to measure corn area in
Mato Grosso. They found an extra 500,000 hectares producing
an extra 6 million tons of corn from "last year´s crop".
They then added another 200,000 ha to the 2016 crop.
This is a 700,000 hectare swing from year to year from
what we thought the state´s baseline was.
With the two years combined, they "found" an extra 9 million
tons of corn even with the drought conditions to date !!!!

If we look back to last year´s record exports, we can kinda start
to believe that this data is on the right track.
With domestic consumption+ last year´s exports = more than
the country produced last year.

So thus, yes, Mato Grosso must have produced more corn in 2015
than we previously thought possible. Was it 26 million tons?
Do we really start subtracting from 26 million tons for the
2016 crop that is shrinking each day?

The kicker with this new data is that it cuts both ways.
Let us assume Mato Grosso did plant 4.2 million ha of
2nd crop corn for 2016. Let us assume an average yield
of 5.5 tons/ha. This = 23 mmt.
Last year the avg yield was 6.5 mmt. Thank you GMO technology !!!

But, the more area we plant, that means even more hectares were
planted outside the ideal planting window which is said to be as high
as 25% of the area. 1 million ha could yield zero.
1 million X 5.5 = 5.5 million cut from which number?
26 or 23 mmt?

Before this analysis came out, we were using 3.5 M ha and 5.5 tons/ha
for a 19.5 mmt crop. This seemed reasonable to me.
Take 20% off for drought and we stabilize at 16 mmt +/-.

But now if we take 5.5 million off of a 26 mmt potential,
we still have a 20 mmt crop as if there was no drought at all!!!!!

Mato Grosso befuddles me with corn. When 700,000 ghost hectares
are "just found" and yields always tend to come in higher than
expected, one must just sit back and watch the show here.
Soybeans are much easier to estimate than corn- assuming you have good data.

For the nation, I an a believer in the sub- 50 mmt club. It is bad.
But in the future, we will need to be ready for 30 mmt MT corn crop and
60+ mmt national 2nd corn crop as the new norms.

However you slice things going into fall of 2016, it looks like
Brazil corn price will remain above historic avg.
In the May newsletter I outlined where the acreage switch
has come from in recent years from 1st corn to soy.

Many assume that all expansion in recent years from 24 M ha to 33 M ha
has come from Brazil expanding in new areas. This is simply
not true.

I believe that in the last two years, Brazil has, in essence,
"blown her wad" on soybean area expansion.

1. no more 2nd crop soy i.e. late planted soy soy/soy for 2017- illegal
2. switch from soy to 1st crop corn up to 2 million ha
(am I predicting this today?- no- but potential exists)
3. Many big farms are in bankruptcy or in a restructuring phase
4. Many medium sized farms only harvested 35-40 bu/acre soy this past year.
(they made no money)
5. MaPiToBa region just harvested their 4th drought crop in a row
(This one was the worst) major losses and bleeding taking place
(Farmers in MaPiToBa and Mato Grosso will be hesitant to plant more sandy areas into soy)
6. Higher interest rates
7. uncertain political future and FX stability- in the end all speculation
8. Livestock sector in need of huge volumes of corn to stabilize the domestic market.
9. Soy high cost of production, but likely to be a bit cheaper than last season.
(Fertilizer has helped cut costs lately)
10. Mato Grosso and Para rate of increase cannot out pace the other switching
11. lack of quality soybean seed in Southern Brazil- too much rain at harvest-
(incentivizes switch to 1st crop corn)

I will be watching this in coming months.

Much of this will be determined by the USA crop.
Can we trade 4.25 corn?
Can we trade US$ 11.00 soy
If late start to Brazil planting in Oct, how does this change things?
If we flip to La-Nina- Southern Brazil and ARG flip to drought.
Ideal conditions for Cerrado
Does China really need 84 mmt tons?

What if Brazil soy crop drops to 96 mmt or the same as last year?
Brazil runs out of soy by December.....

What if soybean prices in USA are US$ 7.00 by Oct?

What if FX is 4:1 and corn is still gold in Brazil this fall?
Could Brazil switch more than 2 million ha back to 1st corn?

Nothing boring about Brazil.

Things keep changing- that is a given here.

Throw in some Trump curve balls or a USA August
drought, we will have ourselves a soybean Olympics yet.
;>)

Enjoy

Thank you all

Kory

* Drop me a note if you want to subscribe or
get on the VIP list.

We will figure something out that works for you.

agturbobrazil@yahoo.com










Tuesday, April 12, 2016

Sunday´s vote- more than just politics- could be soybean paradigm shift- long term

I am sure many reading this and watching the international media coverage of
Brazil´s impeachment vote must think everyone in Brazil is nuts. I sure would
if I was on the outside looking in. I am sure those same readers think that
Sunday´s vote has nothing to do with me. For those who think Trump will
"Make America Great Again", need not read any further. Go elsewhere.
Kim Kardashian has some new nude photos posted. They are much more interesting.

I will start by saying that it is impossible to predict anything in the near future
for Brazil governance. More than likely the next 6 months will look like making pizza
than anything else. Sunday´s vote is just the beginning, it is not the end of anything
or anyone.

Sunday´s vote by the House of Representatives is basically putting Dilma in the
penalty box for up to 6 months. Dilma/PT could survive this yet. It could happen Sunday,
it could happen in the Senate, it could happen via Supreme Court, it could happen
in 6 months once a final vote is made.

The final vote count is set for Sunday evening. It is HOT and DRY in Brasilia.
Hundreds of thousands of people are set to be camped out there pro and against
impeachment by Sunday. People will be thirsty, hot, some drunken, and tempers could
flare at any sign of unfairness. Even if Police and Military control things on site,
there is nothing stopping people from turning to the streets and vandalizing the city or
government buildings. Where does the losing side expel their energy Sunday?
Where and what form does the orgasm come in? Passions are running high on both
sides. As the Rolling Stones would say "I can´t get no satisfaction"

If I were looking at Brazil from the outside, I would wonder how the hell can this
country produce 100 mmt of soy, 85 mmt of corn and 630 mmt of sugarcane? One must
understand that Brazil Ag is an Oasis in a vast wasteland of Brazil politics.
It is the only sector holding the country together- by a thread.
The Brazil ag potential is staggering if it were allowed to run free, be taxed less,
and have decent infrastructure.

This is where my blog is going tonight. I am looking at three possible outcomes
of the current political and economic mess. One of the three is status quo.
Not much of anything changes. Two more years of fog and we limp along.
Depending on the Person(s) and government that replace this one, we could look
back in two years and wish that was the case. We will look back at old days and say
that was not so bad.

Staus quo case

Dilma holds on to power by a thin margin vote- be it Sunday or 6 months from now-
markets and FX react violently. The Dollar/Real moves from 3.50:1 to 4.30:1 in
a few days. Talk of 5:1 in near future. Business gives up and throws in the towel.
More stimulus and help for poor. Brazil prints more money and burns foreign reserves.
Foreign investment disappears. Inflation is rampant. Brazil soy farmer encouraged
to plant everything to soybeans. Soybean prices collapse in time affecting USA
farmer in long run. Two more years go by with not much change.

Extreme case #1

Dilma is impeached and Supreme court decides that new elections will be held in
60 days. Keep in mind this could be 6 months from now after a trial and final vote.
In other words, late 2016 elections.
New candidates position themselves in coming months. Some old candidates rise to the
top mainly because of name recognition, public trust, and calm the PT party down.
A possible candidate is Marina Silva. She is known as the environmentalist.
If she would come to power as a default candidate, this would wreak havoc on
Brazil agriculture to epic proporations. All land expansion would stop.
Strick enforcement of current Forest Code and burdensome fines for producers
not in compliance. Belo Monte Dam project shut down immediately. This limits
Brazil´s long term energy growth. Energy prices continue to increase. Inhibits
maufacturing and GDP. Brazil ag area would likely start to contract. Production would
start to decrease. Production would switch to Argentina with pro-growth government.
China would react in fear because Brazil is the only country that can surge to
meet their protein demands in the coming 10-20 years. Brazil would become the
ODD MAN out in the world. Tree huggers would love us and everyone else would
come to see the alligators and panthers. Brazil Ag would start to die.
Boon for Argentina and American/East European farmer.

Extreme case #2

This is probably the one I would prefer. Dilma is impeached. A new government
is installed. A pro-business, pro investment candidate rises to the challenge.
Who that is today? I have no idea.
Limits on foreign ownership of land are incrased to 100,000 ha +.
Foreign investment is encouraged. Brazil market is opened up to the
world. The REAL strengthens. This is a short term head wind for ag,
but with renewed sources of credit and Brazil economy growing
again, prices adjust and ag works through this short term head wind
for the long term goal of better markets, infrastructure, and competitive
advantage long term. This is what the modern dynamic Brazil farmer wants.

Are there other possible scenarios? sure

I wrote this blog to help better educate the American producer that yes, Sunday´s
vote will affect him at some point. It is an inflection point for Brazil.
If they get it right, as per Argentina´s recent "Ag Renaissance", Brazil´s
best day´s are ahead of her yet. I am optimistic yet. But, if they get this
wrong and we start to look like Venezuela, the phrase " God is Brasilian" can
be changed to "God help us All."

I repeat, Sunday´s vote is not the end but the Beginning. The beginning
of a process that will make many want to vomit.

This vote will go down in history as the vote that changed Brazil for the
better or for the worse 10 years from now. And the form of the new government
will likely dictate soybean fundamentals for years to come as a result of the
law of unintended consequences kicking in at some point.

I am working on a new newsletter. It will feature the switching of 1st crop
corn to soybeans in Brazil since 2008. Now with FX gone wild, and Brazil exporting
all its corn and at the same time as a drought in the Cerrado, we will likely see
the reverse happen in 2016/2017. The southern livestock growers need more corn
earlier in the season. Mato Grosso is pushing corn out the Amazon and inverting
the normal flow of things even with record crops.

The point is, we can soon see a scenario where Brazil soy area starts to
shrink in near term. Details in next newsletter.

Enjoy Brazil Super Bowl Sunday !!!

It might not be football, but the emotions will be running high on Sunday

Kory