During the first part of October in western Bahia the temperature starts to get hotter as we move into the spring/summer months. The one true indicator of change is the early rain we start to get — our signal that planting season is right around the corner. If the rains set in and we are able to get a good soil profile of moisture, there is a chance planters could be running by the end of the month.
We completed cotton ginning around the end of August this year — 45 days earlier than last year. This is not because we are more efficient or better at managing our gin. It's because the number of acres ginned this year, which was similar to last year, had output nearly 40% below the same amount of acres in the past — another statistic created by the excess rainfall from last harvest season that we are all still dealing with.
Brazil in general is going to plant more soybeans in 2009-2010. The credit markets are very tight for most farmers, so they'll go ahead and plant the cheapest crop they can. While soybeans will be the crop of choice here, the outcome of that is completely up in the air for several reasons that are tough to manage, at least when it comes to farming in Brazil.
The different things Brazilian farmers have to deal with that U.S. farmers don't, include:
LABOR FORCE. Farmers in Brazil have to deal with large amounts of labor; this doesn't require explanation.
DELIVERY OF PRODUCTS/SERVICES. In the U.S., suppliers and dealers are honest, and are able to deliver product or services when they say they will. In Brazil it's a crap shoot as to what you will get for service, and trying to plan things around dates and times is just setting yourself up for disappointment.
VERY TIGHT CREDIT/BANKING markets. Borrowing money from most banks for operating costs is next to impossible. It's a different story in the U.S.
MARKETING WITH exchange rates. The exchange rate is a huge killer in South America. For example, I was able to HTA soybeans for May 2010 a few months ago at $10.63/bu. At the time that would have been around 20 reais (Brazilian currency)/bu. Today that is worth 17.50 reais/bu. because the dollar has weakened to its lowest level in 13 years. So hedging beans at a good price is just one step; being able to hedge the exchange rate is the other part of the equation. Add to that trying to figure out the basis and premium formula used here — based off trucking and shipping from the port. It's one of those things that just never seems to go your way.
LAST BUT NOT LEAST, land is much cheaper in Brazil from a landowner standpoint and from a rental position, and that is the No. 1 thing that has brought many of us to Brazil.
Weather will always be a wild card and markets will always fluctuate no matter where you farm, but being able to navigate and deal with unexpected or difficult situations is something all farmers have had to adapt to since the beginning of time.