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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 2nd crop corn and cotton.
Producers say this could be the best 2nd 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 1st 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
Weather has been good.
Evening showers but only stops the harvest for a few hours.
Lots of soybeans remain to
be harvested. Quality is good.
In general, I think the
soybeans are above average. Many 50 bushel yields I am
hearing.
There was some loss to moldy
beans but not as bad as 2007 season.
The big worry is the 2nd
crop. It must rain all of April for crops to mature
normally without burning up.
Moisture of soybeans is about
18-20%.
That sounds wet to guys in
USA, but ideal for Brazil growers.
Lots of dust behind the
combines today.
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 2nd
week of February has 4 to 6 inches of rain for central and
central western Mato Grosso. The 3rd 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 2nd 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 1st 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.
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