16 May - Friday
The Brazilian Minister of environment  has resigned.

Many see this as a defeat for those trying to save the Amazon. I look at things from the farmer perspective.

The bigger problem is a lack of a plan on how to deal with the food vs fuel vs environment debate. Many producers felt attacked by previous Minister. The point is there must be a plan for a violator to mitigate his/her problem. A citation with a fine in the mail will not solve anything. All it did was create hard feelings.

Many are expecting Brazil to expand its area again in 2009 and 2010 to meet world demand needs. Given the current economic disincentive, I think producers will focus on productivity per acre and not so much on expanding land area. I have covered this in the most recent newsletter I have sent out.

 $1000 dollar a ton MAP fertilizer will protect the rain forest much better than any government agency.

8 May - Thursday 
Back In Goiânia
I am back from Mato Grosso tour.  The late seasonal rains will make for a record corn and cotton crop in Mato Grosso.  50% of Mato Grosso producers purchased fertilizer early for 2009.

Those that have not are talking about letting land grow back into pasture. Its just not worth the risk to plant soybeans in 2009. Some say if these market economics stay into 2009, they will not plant 1 acre of soybeans for 2010. Ibama is busy mailing out citations for over clearing of land going back many years. The fines are substantial. This is taking the incentive out of clearing more land.

I can say with 100% certainty that no land will be cleared in northern Mato Grosso this dry season. Economics and environmental enforcement are strong disincentives. 

More comments in June newsletter.

21 April - Monday

Mato Grosso:
I spoke with contacts in central Mato Grosso and western Bahia Sunday. It was raining in central Mato Grosso. It is unusual to have a heavy rain this late in the rainy season.

Normally by May 1 is turns dry. Given the late planting and harvest dates, this rain is a Godsend for 2^nd crop corn and cotton. Producers say this could be the best 2^nd crop cotton and corn ever with this late rain.  

Corn chopping will start for those with feeder cattle on May 1. 

A Chinese contingent visited Lucas do Rio Verde last week. China is hungry for Brazil's pork and beans. Pork producers in Brazil are making good money these days. China has the fertilizer to supply to Brazil. It looks like a good trade going forward. 

Bio-Diesel: Rumor has it that a large scale Bio-Diesel plant in Mato Grosso that opened last year will soon be shutting down. Soybeans to high and Bio-diesel price too low. 

Western Bahia
Heavy rains there the past 30 days. The Cotton crop is very good. However there are reports of BOLL rot and this will limit the upside potential on early planted cotton. 

Edible beans have been a hot crop to grow the past 90 days. Good money has been made. Spot prices of edible beans are 50% off their market top highs. 

I will be in Mato Grosso the 1^st week of May.

8 April - Tuesday
Days are getting shorter in Brazil. The nights are getting cooler and the rains are becoming less frequent. I am working on the May newsletter. I will be focusing on 2009 soybean cost of production. With increased freight costs for Mato Grosso as high as $130 US dollars per ton( $US 3.50 per bushel) this is creating new cash flow problems for the 2009 season.

The basis under Chicago is now 4 dollars under for soybeans. Soybean futures need to stay firm in the coming months or I don’t see how Brazil producers can afford to expand. The dollar at 1.70:1, high fertilizer costs, environmental enforcement (fines), and high transport costs are taking much of the incentive out of soybean production for 2009. Soils that need above normal rates of lime and large amounts of fertilizer show negative returns at this time.

The May newsletter will go out about April 20th. I am dedicating it to Ademir Honorio. Ademir passed away in his sleep on April 4th at the young age of 42. He left behind a wife and 5 kids. Without his knowledge, connections, and dedication to compiling Brazil Ag news updates, this site and newsletter would not have evolved to what it is today.  He will be missed.

I will be in Mato Grosso on tour with a journalist from US News and World Report the first week of May.
 

6 March - Thursday
Production Cost in Mato Grosso
I have been reading that cost of production for soybeans in Mato Grosso might be 1,800 Reais per hectare for the 2009 crop. This is up from 1,100 Reais for the 2008 crop. If we use a dollar exchange of 1.90 :1 for the 2008 crop for the average trading, we get a cost of production of about $235 dollars per acre. For 2009 the dollar is about 1.65:1 and falling today. With increase in prices, the cost of production in dollar terms is about $440 dollars per acre. If we use a local cash price of $10 dollars a bushel (very high for the interior), we need 44 bushel per acre just to break even for 2009. This is at least 6 bushel per acre more than 2008. With Soybeans at record high prices, one would think our breakeven yield would go down. This is the same scenario we were in at the depths of the farm crisis of 2005/2006. With production costs at this level, it will be a disincentive for Brazil producers to expand. Brazil will increase crop area in 2009, maybe 5%, but that's all. I don't see Brazil expanding quickly as some commodity analysts are eluding too.

22 February - Friday
March newsletter goes out today

I am planning a late March and early April Mato Grosso power tour.

Those interested in joining, drop me a note and I will send you an itinerary.

19 February - Tuesday
On Tour: Update from Lucas do Rio Verde 2

I am back in Cuiabá after a great 5 days tour. We put on 2000 KM and covered a lot of ground.  We were in Sinop Sunday and Monday.

The weather has been good - spotty, daily showers, which is normal.  It has been raining each night but sunny during the day. They are able to harvest each day. Moisture is 20% all the time and soybean quality is good. I have been in fields of 40 bushel and up to 65 bushel beans per acre.  The crop is very nice.

From a Mato Grosso farmer's perspective the 2008 soybean crop is in the bag.

Their major concern now is timely planting of the 2nd crop. It too is going in 2-3 weeks late, more specifically the corn.

It must rain until the end of April this year for the crop to make it. As crazy as the weather has been, producers are worried about the rain stopping too soon, even though the last month they have seen nothing but rain. The region of central Mato Grosso is on track for a 3000mm annual rainfall this season.
120 inches, this is above normal by about 20 inches.

The 2nd major concern is the new federal law that over the road truckers can only drive 8 hours per day. Many truckers are quitting. This is increasing the
cost of freight even more. It takes about 120 dollars per ton to ship soybeans to port, or about $3.25 per bushel to ship soybeans 1,200 miles. The local joke on interior Mato Grosso farms is: If drivers can only drive 8 hours per day on their trip to port, It will take the truck 2 weeks to come back.

The government is trying to encourage 2 drivers in each truck, but then freight rates climb even higher. Road diesel fuel and farm diesel are same price, $4.50 cents a gallon with 2% bio blend.

Local cash prices for soybeans are about $9.50-10 dollars per bushel.  Keep in mind 50% of the Mato Grosso crop was sold at 6 dollars per bushel in order to get crop in put financing for this current crop.  They have about 50% of the crop to sell at these higher prices.

On average the cost of production of soybeans is about 250 dollars per acre, with most guys grossing about $375 per acre this year.  They will make about $125 per acre on soybeans.

all for now

16 February - Saturday
On Tour: Update from Lucas do Rio Verde 1

11 February - Monday
Central Mato Grosso Harvest Update

- dry for 4 days

- harvest progressing rapidly

- rain in forecast

9 February - Saturday
Weather Situation Update

I have watched the two week weather forecast on the farm channel again this weekend.    Its not good……… 

The 2^nd week of  February has 4 to 6 inches of rain for central and central western Mato Grosso. The 3^rd week of February has another 2 inches in the forecast.  Harvest will be slow with this forecast. Many wet and moldy beans will be coming off. The bigger issue is the inability to get  2^nd crop corn in the ground in a timely manner. If rains stop in April, the corn will burn up. With this forecast, I am now thinking that the Brazil soybean crop is shrinking. We are now under  60 mmt I am afraid.  I will take a digital camera with on my tour next week and download the photos into my laptop. I will upload photos when I have access to WiFi internet.  More comments below. 

Producer from Paraná state

Hi Kory,

I read in Aprosoja website that the BR 163 region lost 10% of the soybeans until now, due to the heavy rains. In the cropwatchers website, another guy form Mato Grosso said the same. Looks like they will have problems to harvest there. Chicago already saw that.

Here harvesting has begun. Not my crop. Yields are doing fine, from 50 to 60 sacks per hectare.

I was talking to a truck driver last week, and he told me that freight costs will jump dramatically. Soybeans were planted at the same time in Mato Grosso, Paraná, Rio Grande do Sul, etc... due to the delayed rainfall pattern, and trucks will not be enough. Add to that the new law that forbids the truck drivers to work more then 8 hours a day. Guess who will pay the bill? Farmers of course. He said that they ate charging R$180.00 per ton from Nova Mutum to (the port) Paranaguá.

Fertilizers and chemicals prices are crazy. Too expensive.   Soybean formula 02-20-18 around R$1000.00 per ton. Recent crop I paid R$750.00. Last crop was R$560.00 

7 February - Thursday
Situation in Mato Grosso
From Kory contact in Lucas do Rio Verde:

"We have been in the middle of a heavy rainy season, and it has been hard. Almost no beans are harvested. Cotton: we had to reduce the area
because got to late. We changed to corn. We are three weeks behind."

3 February - Sunday
Rain Forecast For Mato Grosso Looks Bad
I have been watching the rural channel this morning in Brazil. Producers were calling into the morning talk show asking about the weather forecasts. The weatherman showed the rain forecasts for Mato Grosso for the next 2 weeks. The first week of February has 4 inches of rain potential.  The 2nd week of February has another 6 inches forecasted.

Given that the soybeans were planted about 3 weeks late this year, this is going to cause some serious harvest delays and spoilage. Possible Asian rust concerns in later planted soybeans. The bigger problem is not getting the 2nd crop cotton planted in January and more delays with trying to plant 2nd crop corn in February. I will be in Mato Grosso February 12-20th.  I will post updates as I am able. 

It is common to harvest soybeans at 30% moisture. They look like silage. Last year I saw a load of soybeans being dumped via end dump truck with 50% moisture soybeans. 

The Amazon rains stated Jan 25th - Feb 10th last year. They look to be delayed a little this year but just as intense as last year. Many headaches ahead for Mato Grosso producers.

29 January - Tuesday
Rainfall Situation
The drought in Bahia is expected to reduce the corn crop by 25%.  It has rained no more than 15 mm in Luis Eduardo Magalhães in January when the normal would be 210 mm.  While northern Mato Grosso heavy rains are hampering the soybean harvest.   In Rio Grande do Sul rain amounts are below normal and irregular.  If this situation continues, it could harm soybeans and corn.
Source: Gazeta Mercantil

27 January - Sunday
Still Think Brazil Will Have a 60mmt Soybean Crop
Rains have been good the past two weeks. The forecast is for favorable rains the next few weeks according to Brazilian weather sources.  Rio Grande do Sul is expected to be dry. 

From my perspective the 2008 Brazil soybean crop is made.  Yields will be good.  We are still seeing discrepancies in the planted area by various consultants.  I still think Brazil has a 60 mmt ton crop. The big question now is how much will Brazil expand for 2009?  I will include an article in my March 2008 newsletter stating that the deforestation of the Amazon is increasing. That might be true, but as of today its not because of soybeans. The leading indicator for increased soybean area will be the conversion of pasture land into soybeans during the next dry season starting in May 2008.

As of today I don't see how Brazil can produce more than 65 million tons for the 2009 season.  It will take time to get the expansion machine moving again. In realty a 63 mmt crop in 2009 followed by a 70 mmt ton crop in 2010 will likely be the end result. This is assuming Chicago stays above 10 dollars a bushel for all of 2008.  Even if soybeans trade 20 dollars a bushel in the coming months, I don't think Brazil can prematurely “Jump Start” the soybean land conversion mania.  It is going to take some time. Rationing will occur 1^st in my opinion. 

I will be on tour in Mato Grosso Feb 12-20 with a group from Minnesota and North Dakota. Stay tuned for harvest updates.

14 January - Monday

soybean nematodes
Producers of soybeans in Mato Grosso are concerned with the infestation of nematodes in crops. The worms attack the root of the plant. A sign that the soybeans has problems is develop a branched root system, with the main part rotten. The nematodes are worms that attack the soybeans at a time when the plant needs more energy and nutrients: at the time of forming the grains. We believe it has been mainly because of the lack of rain in the initial phase of production, which has resulted in the plants not absorbing the nutrients properly. It is a very significant event because most of the plants are stressed by the lack of rain.

The nematode infestation has no immediate solution. The control of pests in the soil can only be done after the soy is harvested. We have very good alternatives, such as the use of crutalária, which is a plant that reduces the population of this nematode. In some cases we have to till the soil, which was very important for the reduction of the population, and there are different management programs which is made by good fertilizer, a good soil management, which will facilitate the development of plants and avoid a significant reduction because of the attack of these nematodes.
Source: Rural Globe January 14, 2008

3 Jan 2008 - Thursday
Soybeans are perfect in Brazil
Harvest started on early soybeans in central Mato Grosso.  Yields are good on early varieties. 45 bushel per acre +.

Here is a note I received from a confidant and soybean consultant in Argentina.
 

Kory
Each week without rains you have to discount 500.000 tons of soybean production.  My first crop estimates was 50 million tons.  My lastest estimation is 49 million tons.

Regards
Pablo

22 December - Saturday
Soybeans Looking Good
I called my friends in central Mato Grosso to wish them a Merry Christmas and Happy New Year. The crops look great. The rains have been good. They plan to start soybean harvest about January 6th. They need to get 2500 Ha or 6000 acres off quickly in January In order to plant cotton in a timely manner.

I will be in Mato Grosso again in mid January with a professional investment tour.

I also spoke to a producer in Paraná state. He said soybean crop looks good. It is a bit dry. They need some rain in the next 7 to 10 days or there will be some problems. Asian rust is almost non existent to date. There have been a few spots detected in Brazil. So far everything is under control and all producers spray a preventative fungicide.

16 December - Tuesday
January Newsletter
I will also include a special update on the Amazon deforestation issue in the Jan issue of the newsletter, which will be sent out before Christmas.
 

10 December - Monday

CONAB numbers show Brazil Soybean crop at 58mmt. Wow ! Shock and awe!!

I have been writing for months now about how Brazil’s ability to expand soybean area is inhibited by weak dollar and high energy and fertilizer prices. The analysts in Chicago and New York have been assuming that Brazil will expand at 10-12% as in the past. I have written essays indicating a 5% per annum increase is realistic. When I see Conab’s numbers at 20.9 million hectares of soybeans and a 58 mmt ton crop (the same as last year). I am too
in shock at Brazil’s inability to expand. If 10 and 11 dollar per bushel soybeans gives us a flatline in Brazil, we need to go substantially higher in Chicago.

I will continue to monitor the situation. I still think Brazil has about 22.3 million hectares planted. This is still 1 million hectares off of the 2004 high planted area. Brazil still has the potential to produce 60mmt+. However if the chronic dry conditions continue, the crop size will need to come down. Mato Grosso has seen some good rains. Other parts of Brazil are getting rains but are below normal in total volumes.

In the January newsletter I will include a chart comparing the last 3 years rainfall In Mato Grosso. The accumulating deficit is obvious.

24 November - Saturday
Back From Mato Grosso
I am back from a 10 day tour in Mato Grosso. I am sending out the December newsletter shortly. It is full of news items. Stay tuned to Brazilintl home page.  In December I will write a 2007 review and 2008 forecast essay.

Interior Mato Grosso cash bean prices for new crop February delivery are on average $16.50 dollars per sac. This is $7.50 USD per bushel.

Happy Holidays

Kory

16 November - Friday
From central mato grosso
 

Crops look great. Good rains. Soybean planting is 90% completed here. The planting of GMO soybeans has decreased from last year.

Dec 1 will start 1st crop cotton planting.

It looks like very little 1st crop corn. Expect everyone will plant as much 2nd crop corn as possible.

Local soybean prices for March delivery are US$16.50 per sac.  US$7.50 per bushel.

Locals have priced fertilizer inputs at about US$12 per sac for trading and chemicals at about US$13.50 per sac.  US$5.45 per bushel and US$6.13 per bushel respectively.

Land prices are firm. Good land close to cities are trading for 400-500 sacs per hectare. This is about US$2,500 per acre. Land farther out is cheaper.

Lots of hog and chicken barns being built in the area.

There is talk of several 100,000 head feeder cattle operations being formed.