Saturday, February 22, 2014

Drought In Brazil

"Did you know that the drought in Brazil is so bad that some neighborhoods are only being allowed to get water once every three days?  At this point, 142 Brazilian cities are rationing water and there does not appear to be much hope that this crippling drought is going to end any time soon.  Unfortunately, most Americans seem to be absolutely clueless about all of this. 

In response to my recent article about how the unprecedented drought that is plaguing California right now could affect our food supply, one individual left a comment stating “if Califirnia can’t supply South America will. We got NAFTA.”  Apart from the fact that this person could not even spell “California” correctly, we also see a complete ignorance of what is going on in the rest of the planet.  The truth is that the largest country in South America (Brazil) is also experiencing an absolutely devastating drought at the moment.  They are going to have a very hard time just taking care of their own people for the foreseeable future.

And this horrendous drought in Brazil could potentially have a huge impact on the total global food supply.  As a recent RT article detailed, Brazil is the leading exporter in the world in a number of very important food categories."

I bring this up because the unknown in South America has pushed old crop soybeans past $13.40, which most considered as the key resistance point.  Many of us speculated that the bear news that the $13.40 would hold was wrong.  We are being rewarded by better soybean prices today.

That made 2013 a little sweeter for the Winkle family, we were able to get a little better price for our soybeans.  Soybeans has been our main cash crop since we moved here in 2004 and we have produced over a million dollars of them.

So far, this hasn't helped new crop soybean prices much but it has helped a little.  The big unknown is how many are needed and how much we can produce around the world this year.  South America has overtaken the U.S. has the world soybean producer but we are still the major number 2, almost equal to them.

Weather will continue to affect markets, maybe even more than in the past.  Grain has never been more important in feeding this record population around the globe.

A drought in Martinsville affects me and my neighbors but a drought in Brazil affects us all.


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