Jim’s Mailbox

Posted at 2:38 PM (CST) by & filed under Jim's Mailbox.

Hi Jim and Dan,

I hope you both had a great Christmas.

I keep mentioning to my readers that we may be in the early stages of a significant drought in the plains area. The first impact will be the winter wheat crop, followed by beans and corn if the pattern continues into the spring.

Cost-push inflation is going to be horrible as is. Imagine the impact of crop failure too. Yikes!

Have a great week!

Hi CIGA Turd,

Thanks for the map. I have also been following that situation very closely. Not only are we dealing with some potential here in the US for dryness issues, but Argentina is running very hot and dry right now as corn enters its critical pollination phase. Soybeans also are at a stage where they too are affected in terms of both size and pod filling.

It looks like the grain and bean situation has the potential to put more pressure to the upside on food prices. As you say, a combination of monetary issues and fundamentals could get ugly very quickly.

Happy New Year,
Trader Dan



China is a heavy investor in Brazil, mostly in strategic sectors like oil or land. Lately they have bought stakes in Brazilian electricity distribution businesses for close to $1 billion.

Why would China do this except for diversifying from its dollar holdings?

Best regards,
CIGA Christopher

China Spends Close to US$ 1 Billion Buying Power Plants in Brazil
Monday, 27 December 2010 03:27

Electric power in Brazil Beijing-based State Grid Corp. of China completed the purchase of seven electricity distribution businesses in Brazil for US$ 989 million, announced the Chinese government this past week.

Beijing-based State Grid will run electricity transmission services in the southeast of Brazil and supply power to Brazilian capital Brasília, São Paulo and Rio de Janeiro, according to a statement at the website of the Chinese government’s state-owned Assets Supervision and Administration Commission.

China’s biggest electricity network operator agreed in May to buy controlling stakes in seven power transmission units in Brazil from Elecnor SA, Abengoa SA, Isolux Ingenieria SA and Cobra Instalações e Serviços SA.

Latin America’s biggest economy is attracting local and overseas investors to develop its energy infrastructure to meet power demand as its GDP expands more than 7%.

State Grid has obtained a 30-year right to transmit power to the southeastern region of Brazil, the statement said. The electricity distribution businesses will generate annual profit of about US$ 110 million, according to the statement.