The Van Trump Report


As I mentioned earlier this week, I was keeping a close eye on the virus and its spread. I was involved in a few conversations last week with large equity fund managers that were really focused on Argentina and Brazil and maneuvering positions. There was worry that as South American weather shifts towards cooler conditions and large masses have been gathering in the streets that corona could gain hold and wreak havoc. The number of cases in Argentina has now jumped to over +100 and Brazil has exploded towards 1,000 cases. There are some requests by government officials in Argentine who are trying to persuade higher-ranking officials to close down port operations at one of the country’s main export hubs for grains and oilseeds. Obviously this proposed shutdown is being met by heavy opposition from those who have financial ties. This is how Italy got held up with their decision-making process, blending economic worries with health concerns, now the country is in a death spiral. I worry the same could happen in South America and other nations where leaders have been put in power by those with the most financial risk. It will be interesting to see how it plays out in Santa Fe and across other parts of Argentina where government money is extremely important and now at risk. Just remember Argentina exports about half the world’s meal. Let’s also keep in mind, Uruguay just closed its borders this week which could start to also limit supply to the Argentine crush facilities. As for Brazil, the country confirmed its first coronavirus-related death earlier this week, a man who tested positive for the virus at a hospital in Sao Paulo. The man is said to have caught the virus domestically, never having left Brazil, suggesting community transmission of the virus could now be deep in South America. Two days ago there were fewer than 200 cases in Brazil, now I’m hearing the number is closer to 1,000 and climbing rapidly. Again, I worry that economic concerns amongst leadership will cause hesitation and indecision which places them dramatically behind the curve. From what I understand, Brazil closed its borders with eight neighboring countries yesterday,  and major layoffs are now rippling through the region. There are reports out of Peru that the government has now implemented a nighttime curfew and fish exporters to China have been halted. There are also reports that metal miners are also starting to reduce movement. In fact, Reuters recently reported that a group of 50 top-agribusiness associations has sought support from the federal government to guarantee Brazilian ports continue to operate amid the coronavirus crisis. Remember, the issue in China started to become workers at ports and docks simply not showing up as the “risk-to-reward” didn’t seem worth it. In other words, the government can do all they want to keep the ports and truck running but the workers still have to show up. Another major concern I have is the fact we could eventually start to see a greater reliance on national agri-production for self-sufficiency. Meaning countries are forced to turn away from global exports as leaders are pressured domestically by voters out of work and out of food. With grain and soy prices beat up, I think this a long-shot I want to bet on. Yes, you could definitely argue I’m talking my own position as I desperately want prices to go higher on the farm. But at the same time, I think some of the world’s low-cost suppliers are going to find this problem nearly impossible to corral.  

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