Sunday, February 18, 2018

Feb 18th blog

Hi everyone,

The past two weeks have been kinda exciting.

The trucking crisis on BR 163 lasted only one week compared
to one month last year. The military helped a lot there.

A few spots received too much rain and caused some soybeans
to sprout and mold. Nominal losses.

Parana is so very slow to harvest.

Parana moved the 2nd crop corn planting deadline for crop insurance
from Feb 10th to Feb 20th. This made sure at least a few hectares got planted.

Some will likely plant 2nd corn into March with idea of getting lucky
with May rains. Farmers have short memory's.

Soybeans have rallied as expected from the Jan 12th low.
I believe that was a significant low.

I am still looking for higher prices.

It looks like Argentina will come in at least 10 mmt less than
original expectations. We can probably knock a million ton
off of Uraguay and Paraguay too.

The numbers are starting to add up.

I have been thinking Brazil was between 112- 114 mmt.
The ranges have been from 112- 118 mmt.

A few high flyers have been thinking 116-117 mmt.

I think the Brazil soybean crop plateaued three weeks ago.

It is still a hell of a crop, but the high flyers will now need to
lower their numbers a little in the coming weeks.
Pyschologically reenforcing the Bull

Parana is coming in less than last year with low seed densities.
RGDS also is suffering drought along its southern border and
early soy yields are less than last year.

Mato Grosso still has a chance at coming in at 31 mmt.

Argentina farmers are in no hurry to sell. Each month they gain
1/2% with less export withholding taxes.

Brazil farmers are also looking for a bit more before they sell

I believe the old crop carryovers in USA will come down as crush
is increased and demand shifts back to USA.

I believe that China will not mess with USA in soybean trade war now
that Argentine crop is shrinking. There is no use to poke the Bear when
a Bull could awaken. They can still get 10.25 soybeans.
If they mis-step and Argie crop is much smaller and USA has a weather issue,
beans could be 13 bucks quickly, so why slap a tarriff on beans in a bull market??

The irony in Argentina. Bunge is/was in the middle of expanding the
Rosario crusher from 20,000 tons per day to 30,000 tons per day.
And now can't originate beans?

The early frosts in Argentina also have my attention. The climate is
acting goofy again. It looks like we need to be ready for the black swan
events moreso than assuming all is normal.

After I see how markets act on Tuesday, I will update technical
probabilities in soy market in the March newsletter.

Lucas ag show is coming up in March also. I am not sure if I will
go out then or wait until June and do a corn crop tour.

My son goes to school six days a week. The next 6 weeks until
Easter are intense here on a personal level.

The more important trend long term in Brazil is what will happen
in Oct this year. National elections are coming.
The military has taken over policing operations in Rio de Janeiro.
There is also movement to more enforcement in Goias also.

Brazil is moving to the RIGHT. The public wants order restored.
At what cival liberty cost?  Unknown today

How far Right can Brazil go by Oct is what everyone should be
asking when talking about Brazil and or doing buisness here.
Things could change fast in 2018.

* Keep an eye on Argentina for fires and lack of water for cows.


* Keywords: Brazil soy, Argentina soy, infrastructure, politics, weather, soy technical

Tuesday, January 30, 2018

Feb 1 update and Amazon rains

Hello all,

Happy New Year

Carnival is early this year. Feb 9th-14th
It always rains during Carnival.

The Brazil soy crop has been getting bigger in December and January.
Some say 114 mmt. It very well could be.
Given the forecast for the next 2 weeks, I will say that the crop has
plateaued here for now. If things get out of whack weather wise in
the coming weeks, we may even start to hear of small decreases in crop size.
Lack of sun, more disease, moldy beans, harvest loss in general.
Usually loses from too much rain are small compared to drought losses
which are now occuring in ARG.

I remember back to the early 2000's being out in Mato Grosso at the end
of January and early February. These are called the Amazon rains.
It can rain every day all day and all night for two weeks straight.

I remember when Sorriso area got 24 inches in two weeks. I believe
it was 2005.

Back in the 2000's MT was planting 5 million ha of soybeans and
maybe 1 million ha of 2nd corn.

Today we are at 9.5 M ha of soy and last year was 4.7 M ha of 2nd crop

Back in the 2000's everyone had smaller 6 row planters and small
front- wheel assist tractors pulling them. They could float on water.

Today we have bigger toys.  30 and 45 row planters with 370 - 500
hp tractors hooked to them. These are no-till conditions.
Will an Amazon rain event have a negative impact on planting pace?
JD 680 combines that weigh 40,000 lbs with 10 ton more in the
hopper a harvest issue later this month? We need to float this stuff.

The forecast is for 5-10-15 to maybe 20 inches in spots.

A rain in the morning and if the sun comes out, they can be harvesting
after lunch time. The beans might be 25-30% moisture, but they can go.

By 5 pm the beans are 17-18% again and rolling at full speed.

The Cerrado soils can take a lot of water- to a point.
The Tropical sun drys things out quickly.

But, the Amazon rains scares the bejesus out of the farmers out there
that have a lot of ground to cover and dirt roads to get production out.

The roads are much better than 2005. Many thousands of kilometers of
asfault have been installed.

I remember when BR 163 was washed out at 1 or 2 bridges at different times
going south. My van had to take a detour around through several farms, be pulled
by tractors for a distance and over a wood bridge being over flowed by water that
was a tributary of the main river that was flooding BR 163.
Crocodile Dundee mixed with a little Mission Impossible.

Thank you for all the annual renewals at the beginning of the year.
Many of you have been with me since the beginning in 2005.
13+ years now

I am positive to soy prices going forward.
All of this has been outlined in the newsletters since Oct.

I think Sept 12 low and Jan 12th low are long term lows.

I will try and update more in the future.



keywords: Mato Grosso rains, planting progress, machinery size, soy prices

Sunday, November 26, 2017

Nov 26th blog update

Everything is peachy.

Nice general rains from time to time.

There are a few problem spots, but in the whole scheme of things, minor.

Argentina sure has had their share of problems.

The past two years were floods. A very cool spring time with snow.
Lately Cordoba state has been dry.
On Nov 24th, they had a fairly serious frost in Buenos Aires province.
Very very strange weather.

Does this prelude to El Nino or a dry 2018?
I do not know.

Brazilian farmers in the south talk about when the season starts
with weather coming out of the south, it is never a good year.

I think for the next 4-6 weeks, we sit back and relax.
If there are going to be problems, they will manifest from February onward.

Much talk this past week about railroads in Brazil. Much of this is political.
I have sent out special report in December newsletter to subscribers pulling all
the data points together from the past year.

BNDES showed a 25% increase in machinery loans in 2017. This is the same
number John Deere published last week as per increase in South American sales.

I am looking at a 10-15 million ton pullback in BR corn production. First crop
will come in 5-6 mmt less than last year. 2nd crop will come in 10 mmt light.

I expect a reduction in BR corn exports for 2018.

Soybean crop remains a 110 mmt potential. The range could be anywhere
from 105 to 115 mmt. A crop size less than 106 mmt would be bullish.
A crop size above a 110 mmt is bearish.

FX sunk last week to 3.22:1 down from 3.30:1 on the idea they have cut some
spending for the 2018 budget.

I still think political risk for FX is a factor for 2018.

Dollar: Real FX trading less than 3.20:1, bullish for soybeans.
Dollar:Real FX greater than 3.30:1 bearish for soybean prices.  (CME)

Keep an eye on November continuous soybean chart.
Last week's SX18 high was 10.09 1/2. That shows higher highs
and looks constructive. I think there are some hints in the SX18 chart to
give us hope.

(Previous highs basis SX17 were 9.94 and 10.03) If we can trade 10.15
or 10.17 1/2 basis SX18, that would be a positive nugget for the future.

If we go down and trade 9.80 or close below 9.60 basis SX18- look out below.

But for the next few weeks, I expect sideways to lower prices.
Early 2018 should be a low.

Happy Holidays from Brazil,


keywords: BR railroads, climate, BR soy and corn production, soybean prices, machinery sales

Saturday, November 4, 2017

Nov 4 blog update

In memory of Andre Luft.

I learned yesterday a day a friend of mine had passed away. I cannot say we were close.
We kept in touch and Andre would help me from time to time with a project or tour etc.

Andre was a giant of a man. He was almost 7 feet tall. Gentle as a lamb.
He spoke perfect English. He was well educated and always looking for
opportunities and adventure. He left behind his wife and two sons. His mother
is a renowned author in Brazil. I believe his son's are studying abroad in California
and New Zealand.

Andre passions were agriculture and surfing. He had managed farms in Bahia, worked
in the seed business for sweet sorghum for ethanol production. The last three years he
moved to Mozambique with his wife. They worked for group setting up a farm from scratch
there. From nothing to something. They literally had to build their own semi-mud hut to
live in when they got there. Today there are houses, silos, machinery, corn, soybeans,
edible beans, and sunflowers growing.

He did not need to this project in Mozambique, he wanted too !!!!

He wanted to see where life would take him.

He loved to surf. In the last couple months he did return to Brazil
for heart surgery. He was given the OK to be physically active again.
He grabbed his surf board and headed to the beach in Mozambique.
It is there his heart gave out. He died doing what he loved the most.
Andre Luft left us at 51 years old. Too young

When I think of the size of Andre, I told myself this must be what
Zeus looks like. Hands that were huge and a heart even bigger.

His facebook page in Mozambique below:


Rains have returned to the dry areas. We are still below normal, but planting
is zipping along now. Parana is too wet and that looks to continue.

Dollar:Real is 3.30:1

This is increasing soybean sales.
Soybeans are now at a higher price than they were in July at the peak.

Soybeans were down 11 cents and with FX up 4 points Friday, the
cash prices in Brazil actually went up.

From what I read, it looks like a 2nd corn ethanol mill will be built
at Sinop, MT. Ready July 2019. Paraguay group

Lots of talk about railroad concessions for 2018.
2018 is an election year so there will be much talk about
projects again. Let us keep an eye as to where the boots on the
ground are. At this point it is the BR military on BR 163 in Para state.
Paving crew is installed and they are hiring workers from the area to
run graders  etc. One problem, the rainy season now starts !!!!

2018 proves to be interesting here.

50% of the population want Lula in jail. 50% of the
population want him back as President.

The next most popular guy is Bolsonaro. Very far right.
Wants everyone to have a gun.

Many candidates in between.

Unless I start to see soybeans on fire, I will not worry too much
about Brazil bean crop in coming months. Big area planted with
lots of fertilizer. It was planted late so results will be different
than last year.

February is crucial for 2nd crop timing and harvest of
1st crop. We don't have any more days to burn because of rain
delays for example.

I also read that Maranhao state is having some financing issues.
Less soybean area and less fertilizer on some areas. Nominal area,
but these are carryover problems from the 2015-2016 drought
that still linger in frontier areas. Last year did not heal all wounds.

Thank you for all the renewals the past month.
Newsletter and VIP level. All are appreciated.

Keywords: Andre Luft, soybeans, railroad, BR 163, politics, corn ethanol,
   dollar:real FX

Sunday, October 8, 2017

Oct 8th blog update

The clock is ticking

High and dry in Cerrado states and too much rain in southern Brazil.

It is too soon to kill the BR crop.

It is difficult to bet against the new soy seed technology.

We have seen many times the past two years where we have an
early dry spell and then a shot of rain at the end makes for fantastic
bean yields- in both hemispheres.....

Mato Grosso cotton producers are now flipping to a super short
season soybeans. 85-90 day soy

This now pushes us into mid- January for harvest. This can be risky
as per timing to get cotton in the ground in the ideal window.

The forecast is dry for another two weeks. Some producers may opt
to forego planting soybeans ahead of the cotton with the idea of planting
a single crop of cotton in December and maximize the yields on that crop
instead of trying to deal with a half a crop of soybeans ahead of the cotton.

This next week is a tipping point as to making these decisions.

Conab is out on Tuesday morning with their first look at 2018
planted area and production.

BR range for soybeans is from 106.5 to 114.5 mmt so far.
Last year at this time we were looking at 102-105 mmt of potential.
End result was 114 mmt.

Now we are looking at planting at least another 1 million hectares compared
to 2017. Unless we start to pull acres away in favor of cotton.

Argentina looks to be planting 1 million hectares less soybeans than last year.
Flooded areas and corn are changing the mix.

We now look to USDA on Thursday. After two months of yield increases
will they choose to decrease the avg yield?
With all of the yield reports I have heard, no one is saying the USDA is wrong anymore?

I will send out a Conab highlights newsletter to subscribers after the Conab report

This year is starting out exactly opposite of 2016-2017. It is eerily similar
to the 2015-2016 crop year and also the 2010-2011 crop year.  Late start
with droughty tendencies.

China continues to be in the news every week in Brazil. In my mind, the
Chinese are playing a much bigger game in South America than most
of us can imagine today.

China needs South America's food. If anyone decides to get cute in future,
China needs an Ace or two in the hole. If the soybeans get cut off, maybe
Brazil's power grid will undergo a sudden maintenance period. Maybe Brazil's phone
and internet system will have a black out. Maybe Chinese beans at port will
take priority over another country's shipment of soy.

I think the Quid pro Quo dynamics between China BR and ARG have just begun.
Add in some war and economic sanctions with North Korea, things get really
interesting as per how China handles this.

Brazil seems destined to shift hard left or hard right in next election. Brazil
might look like USA in one year. 50% of the population is pissed off all of
the time. This seems to be the new norm !!!!

Have a great week,


keywords: BR soy, Conab, China, crop size, acreage switch, short season soy

Friday, September 15, 2017

Sept 15 blog update

Hot and Dry and more of it.

It looks like another 3 to 4 weeks of hot and dry.
No one is planting.

This year looks to be different than last year.

For Brazil, planting soy in October does not mean reduced
production potential.

Brazil can still crank out 110 mmt even if soybeans are
planted later.

The 2nd crop corn becomes the risk.

Carryover stocks of soy and corn in Brazil as of January 1, 2018 will
be much higher than in recent years.

As per soybean market action, I am now a bull.
I have outlined the reasons why in recent newsletters.

One thing we need to watch is that if this droughty pattern continues,
will be export loadings in January be affected?

Brazil will have carryover stocks to load ships in Janaury if the
market needs them.  But basis and or futures will have to pry
them out of farmers hands.

A possible bullish outcome of this weather pattern would be
something like this:

We plant late which means February harvest of soybeans.
Maybe February is wet?

Chinese increases year end buying more soy out of USA which
pulls down perceived carryover stocks for 2018.

For some reason or another Brazil comes in 5 mmt light
on her potential.

Chronic wetness causes problems for Argentina wheat and
corn planting.

Does that mean Argentina increases planted area of soybeans?

It is hard to bet against Argentina. Last yer we saw pictures of
flooding and there was talk of a 50 mmt soybean crop. In the end
the Argentina crop was 58 mmt and 40 mmt of corn.
What problem?  What flooding?

This year the flooding is much earlier. Will that mean the opposite
result this year?  Wet start and a dry end to the year?

The perfect storm is setting up for higher prices?

Way to early to be killing SA crops. I will wait until
January before I get to concerned on the loss of potentials.

But, I think we have higher prices going into the end of year.

The markets ability to shake off the last USDA report tells me
the lows are likely in.

I don't think the market believes the crop size and yields.

Another 30 days of dry in Brazil, the soy market needs to
add in some risk premium again.

We can't just assume a 115 mmt is in the bag for 2018-
not just yet .....


keywords: Brazil SA weather, late planting, crop size potential, bullish

Thursday, August 31, 2017

Sept 1 blog post

Hot and dry in Cerrado states.

This is normal for this time of year.
But rains should be starting by mid-month.
The forecast is for below normal rainfall until about Oct.

This may cause a bit later planting to soybeans than last year.
Southern Brazil is also worried about a late planting which then
increases the risk of 2nd crop corn.

The political and economic situation seems stable at the moment.
We would like to see more growth, but the economy is just
dilly dallying along. Business's continue to close and very few
new ones open. The ag economy is the GDP generator in the
economy. Without the massive ag production, Brazil would be in
deep doo doo.

China seems to be in the news every week. They are either buying
something or dealing on something all the time.
Even Korea bought a soy processor in Goias recently.

As per my April price forecast, I was expecting an early September
low in the markets. 9.03 is important for SX 17.

I will update again mid-month.

Brazil is going into the 2018 marketing year with massive amounts of
corn and soybean carryovers.

Br fertilizer delivery's are running slightly behind last year's pace.

Brazil meat exports are returning to pre-crisis levels.
Meat inspection at the packers are at record levels.

It looks like I will be in Mato Grosso again in September. I have
an international group coming in.

The Real:Dollar remains steady at 3.15.

If it were not for the lower dollar in relation to other international
currencies, I think the BRL would be closer to 3.50 today.

Elections for BR are in one year.  Oct 2018.
This will define BR's destiny.

Asphalting of BR 163 will finally get done in 2018. Look for more
harvest delievery problems going north again this rainy season.

Key words:  climate, politics, soy prices, BR 163, China