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.
(2018)

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,

Kory

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


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