Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Tuesday, August 26, 2014

August 26, 2014

International Trade

Inbound cargo at Puerto Cabello:
  • 1.537 of beef from Brazil and Costa Rica for Sertrading, Matadero Nuevo Carnic, Comercial San Martín y Matadero Central.
  • 1,133 tons of lentils from Canada for CASA.
  • 244 tons of black beans from Costa Rica for CASA
  • 2,150 tons of milk from Costa Rica for CASA
  • 14 tons of school uniforms from Panama for Trípoli C.A.

One military officer dead and 624 arrested in war on smuggling
There have been 624 arrests since Venezuela began what it calls a "war on smuggling" food, gasoline, medicine and other products to Colombia. A Venezuelan Army colonel was killed - by "smuggling mafias" according to Executive Vice President Jorge Arreaza - in the La Guajira region in the Northeast border area of Zulia state.  The official campaign against smuggling includes closing the 2,200 kilometer border with Colombia at night. The border area has been reinforced with 17,000 soldiers and 12,000 police agents. President Maduro has said "it is absolutely forbidden to export staple products that are part of the diet of Venezuelans" General Vladimir Padrino, head of the Armed Forces Strategic Operating Unit says 493 tons of food have been seized in Táchira state since the plan went into effect on August 11th. More in Spanish: (AVN; http://www.avn.info.ve/contenido/incautadas-493-toneladas-alimentos-frontera-colombia-trav%C3%A9s-plan-anticontrabando; Tal Cual, http://www.talcualdigital.com/Nota/visor.aspx?id=106776&tipo=AVA; Infolatam)

Border shutdown does not solve smuggling, analyst says
In the opinion of Leandro Area, a former member of the Presidential Committee for Integration and Border Affairs (COPIAF), poverty is among the main features characteristic of the border areas. "People make a living by passing commodities across short cuts and rivers for two reasons: the need of residents and because this is nobody's land," he said. Area is afraid that the Venezuelan government does not consider the social reality by ordering the night-time closure of the border. (El Universal, http://www.eluniversal.com/economia/140823/border-shutdown-does-not-solve-smuggling-analysts-say)


Oil & Energy

Venezuela oil price falls to lowest since 2011 even as Iraq, Syria and Ukraine boil
Venezuela's weekly oil basket continued its fall to its lowest since 2011 as international oil markets seemed well-supplied even as crises in Ukraine, Syria, Libya, Iraq and Israel boiled over. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 22 was US$ 90.89, down US$ 1.06 from the previous week's US$ 91.95. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2349306&CategoryId=10717)

Planta Centro’s Unit 3 is still out of service after a breakdown reported last June 25. Union leaders from the electric sector have decried lack of maintenance as the cause of the constant failures in the thermo electric plant. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40749&idc=3)

PDVSA admits Amuay refinery is operating at 69.4% capacity

China's CNPC gets two Venezuelan jet fuel cargoes
China Oil Corp, a unit of state-run CNPC, in July received two 240,000-barrel cargoes of jet fuel from Petroleos de Venezuela, and the shipments were sent to the United States, according to an internal PDVSA document seen by Reuters. China National Petroleum Corporation (CNPC) and its trading arm Petrochina normally take cargoes of Venezuelan fuels such as diesel, fuel oil and jet fuel. It either uses those cargoes for its own needs or resells them directly to refining companies. China receives the Venezuelan oil as payment for loans made to Venezuela's government that date back to 2007. China Oil received the first jet fuel cargo on July 4 on the tanker Pretty Scene with the island of Puerto Rico as its destination. The second one was loaded on July 29 on the tanker Walnut Express with Florida as its destination. (Reuters, http://www.reuters.com/article/2014/08/25/oil-venezuela-exports-idUSL1N0QV1QM20140825)


Commodities

73% of industries are reporting a drop in inventories
Eduardo Garmendia, president of the Venezuelan Industry Confederation (CONINDUSTRIA) reports that "industrial activity in Venezuela continues to drop in general terms". A survey taken by the organization shows "inventories are at their worst point since 2004", and 73% of those polled say their inventories have dropped since the 3rd quarter of 2013. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140826/el-73-de-los-industriales-reporta-caida-de-inventarios)


Economy & Finance

Special report: Dollar shortage crimps Venezuela
A complex system of official and unofficial exchange rates, a legacy of the late former President Hugo Chavez's 14-year rule, has left Venezuela with a shortage of dollars and stores empty of basics from toilet paper to medicine. A decade and a half of increasing government control over the economy and official policy that overvalues the bolívar has brought private Venezuelan industry to its knees and left the nation dependent on imports. Annual inflation reached 60.9% in May, the fastest in the world, while gross domestic product probably shrank 2.1% in the second quarter, according to the median of economist forecasts compiled by Bloomberg. Venezuela has delayed regular reporting of economic statistics and is yet to publish inflation data for June or July. Companies pay for foreign goods using money distributed by the government at rates ranging from as low as 6.3 bolivars per dollar to 50 per dollar. On top of those official rates is the black-market rate of 84 bolivars that most Venezuelans pay to obtain U.S. currency. The bolivar has lost about 71% of its value on the black market since President Nicolas Maduro came to power in April 2013 with a pledge to deepen Chavez's socialist rule. The currency isn't traded in global markets because of the government controls. The increasing difficulty of finding dollars is forcing Venezuelans to official distribution depots, where they line up for subsidized goods with numbered tickets that give them the right to buy subsidized frozen chicken, rice or cooking oil. The lines are guarded by soldiers with machine guns because often there aren't enough goods to go around. At least 43 people have been killed this year in clashes caused partly by shortages. Merging the exchange rates would mean making a short-term sacrifice for a longer-term benefit because goods currently imported at subsidized rates would become more expensive, according to Barclays. "If they don't do it, next year you'll have inflation of at least triple digits and it could be quadruple digits," says Francisco Rodriguez, of Bank of America Corp.  "The government's aware that it's counterproductive to continue on this path. However, they may not be aware that it's so serious and that they have so little time." The government is running out of time to implement planned reforms before parliamentary elections in 2015 lead to policy paralysis, according to Barclays.  "We give them a window of opportunity until mid- September," says Alejandro Arreaza, an economist at Barclays. "After that, Venezuela will enter a new electoral cycle. That will reduce the possibility of making any adjustments." Maduro has postponed at least two deadlines to fix the currency since last month, while Economy Vice-President Rafael Ramirez, the leader of a relatively business-friendly government faction, was reported as saying that a two-rate system will be adopted "as soon as possible." Bank of America expects the government to set a new rate of 20 bolivars per dollar for essential imports while maintaining a secondary rate of about 50 for non-essential goods. Barclays said Venezuela will devalue its currency to about 25 to 30 per dollar, while Banctrust & Co. predicts a level of about 30, and says prices will rise regardless of whether the government devalues the bolivar. "Changing to a balanced exchange rate would have a very significant impact on prices, and that's what the government's afraid of," says Hernan Yellati, the head of research at Banctrust: "Fear of inflation in Venezuela is a real fear." (Sun Sentinel, http://www.sun-sentinel.com/digitalunlimited/partners/bloomberg/sns-wp-blm-news-bc-venezuela25-20140825,0,3740617.story; Bloomberg, http://www.bloomberg.com/news/2014-08-24/dollar-shortage-bites-venezuela-as-devaluation-seen-currencies.html)

Government seeks "gradual" adjustment with controls
The government is betting on expanding existing controls to fight scarcity and smuggling. "The biometric system is not intended to regulate, but for all that is produced in the Republic to reach the people," claims President Nicolás Maduro apropos a mechanism intended to be installed in all supermarkets throughout the nation. "We will set up a benchmark similar to the system called SADA (...) SADA is used to monitor food, which foodstuffs are produced, where they are distributed, where they are sold, which ones are brought from abroad, at which port they arrive, where they are stored; it is the same system for all goods and inputs moving in the economy," he says. Business associations, such as the Venezuelan Industrial Confederation (CONINDUSTRIA) and FEDECÁMARAS, as well as the National Consumer Alliance (ANAUCO) have warned that additional controls will not resolve the problem of scarcity, but will create more bureaucracy. (El Universal, http://www.eluniversal.com/economia/140825/venezuelan-govt-seeks-gradual-adjustment-with-controls)

Price Superintendent to force stores to increase number of cash registers
Andrés Eloy Méndez, Venezuela's Superintendent for Fair Prices, say they will force grocery stores to increase the number of cash registers, in order to reduce client lines. (El Universal, http://www.eluniversal.com/economia/140825/price-superintendence-to-force-stores-to-increase-number-of-cash-regis)


Politics

Protests start again in San Cristóbal, seven reported wounded
Demonstrators took to the streets in Pueblo Nuevo since early Monday morning to protest against the biometrics system (fingerprint scanners) and the new measures against smuggling and shortages. National Guard troops tried to disperse the crowds and chased them even inside buildings. Protests include students and community leaders.  (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40753&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140825/clashes-and-barricades-in-san-cristobal-southwest-venezuela; and more in Spanish: El Universal, http://www.eluniversal.com/nacional-y-politica/140826/siete-heridos-dejaron-disturbios-entre-jovenes-y-gnb-en-tachira)

Obama again seeks support for mediators and talks here
US President Barack Obama has again said his government would "support mediation efforts" to facilitate a dialogue between the Venezuelan government and opposition in order to cut down on violence. He made his statement in response to a request by opposition leader Pablo Medina for Obama to speak out on the issue of sanctions on Venezuelan officials that have been approved by the US Senate and House of Representatives. More in Spanish: (El Universal, http://www.eluniversal.com/nacional-y-politica/140826/obama-reitera-apoyo-a-la-mediacion-por-el-dialogo-en-el-pais)

Venezuelan mayoralties: No money; no autonomy

The current economic crisis in Venezuela has brought municipalities on the brink of bankruptcy, according to the 76 opposition mayors within the Venezuelan Association of Mayors. The mayors say 2014 has been a terrible year for three reasons: the Constitutional Allocation is calculated based on an oil price of US$ 60 per barrel, while the real oil price is about USD 100 per barrel; annual inflation is around 70%, plus, and the central government decrees wage increases, but fails to transfer funds needed to meet those obligations. (El Universal, http://www.eluniversal.com/nacional-y-politica/140825/venezuelan-mayoralties-no-money-no-autonomy)


The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Friday, August 22, 2014

August 22, 2014

International Trade

Inbound cargo at Puerto Cabello:
  • Over 29,000 tons of yellow corn from Bunge Latinoamérica for Alimentos Balanceados Tinaquillo C.A. y Nutrición Técnica Nutritec C.A.
  • 14,153 tons of beef and chicken from JBS S/A for CASA
  • Over 14,000 tons of wheat from Terra World Trade for Molinos Carabobo
  • Over 1, 706 tons of milk
  • 695 tons of margarine from JBS S/A for CASA
21 vessels remain at bay awaiting dock assignment. One is carrying 33,000 tons of white corn from México and other with 33,000 tons of yellow corn from Argentina for CASA.

Food staple imports increase by 30% in order to counter outbound smuggling
President Nicolás Maduro reports the government has increased basic food imports by 30% during the first semester this year in order to replace products smuggled outside the country.  He says: "if they (the smugglers) hurt the basic supply of food taking 30 and even 40% out through an illegal system of logistics, we must invest to compensate the same amount of supplies." More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/importaciones-productos-b%C3%A1sicos-aumentaron-30-para-contrarrestar-da%C3%B1os-del-contrabando)


Logistics & Transport

US warns of limited access to flights in Venezuela
The US Embassy in Caracas has urged US nationals to take precautions when they travel to Venezuela due to reduced availability of flights. DELTA, AMERICAN, and UNITED Airlines have cut their services in Venezuela. The Venezuelan Association of Airlines said the number of seats available to travel between Venezuela and the United States has dropped to less than half throughout this year, AP reported. (El Universal, http://www.eluniversal.com/nacional-y-politica/140820/the-us-warns-about-limited-access-to-flights-in-venezuela)


Oil & Energy

Chavez propaganda tool CITGO for sale as crisis worsens
A decade ago, Hugo Chavez started using Venezuela’s CITGO Petroleum Corp. to provide heating oil to the poor in the U.S. to spread his socialist message. His successor is now seeking to sell the company to stem the South American country’s deepening economic crisis. State-owned producer Petroleos de Venezuela SA wants at least US$ 10 billion for Citgo, its U.S. refining and distribution arm, company president and Oil Minister Rafael Ramirez said Aug. 5. Since energy news agency ARGUS first reported the potential sale July 24, Venezuela’s bonds have plunged an average 5.9%, the most in emerging markets after Argentina’s defaulted debt, according to data compiled by Bloomberg. (Bloomberg, http://www.bloomberg.com/news/2014-08-21/chavez-propaganda-tool-for-sale-as-crisis-worsens-andes-credit.html)

 As Venezuelan deliveries wane, allies tap traders for pricey fuel
Venezuela signed numerous energy deals during former President Hugo Chavez's 14 years in power, allowing countries in the Caribbean, Central America and other regions to receive oil on favorable financial terms. The accords, along with almost 500,000 barrels per day (bpd) that are sent to China to repay debts owed by Venezuela, are weighing on the cash flow of state-run oil company PDVSA. Venezuela last year sent an average of 243,000 bpd of crude and products to countries that signed accords known as PETROCARIBE, the Caracas Energy Agreement and other bilateral deals. Those shipments were an 11% drop from the previous year and the lowest since 2007. PDVSA has been forced to trim exports of oil products to its customers due to lower oil output and weak economic growth at home, a domestic refinery network that has not fully recovered from a severe accident in 2012, and financing agreements with China that divert much of the OPEC nation's oil production to Asia. (Reuters, http://www.reuters.com/article/2014/08/21/us-venezuela-oil-exports-facts-idUSKBN0GL1LS20140821;  http://www.reuters.com/article/2014/08/21/us-venezuela-oil-exports-insight-idUSKBN0GL1LP20140821)

PDVSA launches TV channel
State-run oil company PDVSA has launched a TV channel to broadcast information on the sector with special emphasis on socialist policies. The Ministry for Communications and Information reports that "PDVSA TV began last week its trial period, which will last two months." It includes three broadcasts of one hour each, in the morning, afternoon. (El Universal, http://www.eluniversal.com/nacional-y-politica/140821/venezuelan-oil-giant-pdvsa-launches-tv-channel)

BANCO BICENTENARIO to loan PDVSA VEB 1.2 billion to build sugar complex
 Government owned BANCO BICENTENARIO will lend state run oil giant PDVSA VEB 1.2 billion to develop a sugar agribusiness complex in Cojedes and Portuguesa states. The amount is 26.09% of the bank's entire agricultural credit fund. More in Spanish: (El Mundo, http://www.elmundo.com.ve/noticias/economia/banca/bicentenario-prestara-bs--1-200-millones-a-pdvsa-p.aspx#ixzz3B7FCDExf; El Universal, http://www.eluniversal.com/economia/140822/bs-12-millardos-prestara-el-banco-bicentenario-a-pdvsa)


Commodities

Venezuela to create nationwide fingerprint detection system to limit food smuggling
President Nicolas Maduro ordered the creation of a fingerprinting system in stores that sell food to limit smuggling of subsidized staple products to neighboring countries. The system is meant to ease chronic shortages of consumer products ranging from cooking oil to toilet paper by preventing shoppers from buying large quantities of the same goods. "(We will) create a biometric system ... in all distribution and retail systems, public and private," Maduro said. He also announced a system of guidelines for distributing all products that are traded in Venezuela, and said he would provide details soon. Fair Price Superintendent Andrés Eloy Méndez says that by November 30th all national public and private food networks must have installed the biometric fingerprint system. He did not explain how. (Reuters, http://www.reuters.com/article/2014/08/21/venezuela-food-idUSL2N0QR0QG20140821; and more in Spanish: El Universal, http://www.eluniversal.com/economia/140822/sistema-de-guias-regira-el-comercio-de-todos-los-bienes)

Opposition and business leaders call "biometric system" a rationing card
Opposition leader Henrique Capriles Radonski has harshly criticized the announcement that the government will extend fingerprinting to customers of private supermarkets. "The biometric system they want to impose on markets is nothing but a rationing card, another government failure", which will worsen scarcity. "They talk about supplies and the national production system is paralyzed". He called for a "national agreement" to strengthen domestic production. Congressman Alfonso Marquina of Primero Justicia said "this is none other than the Cuban rationing card".  At the same time, FEDECAMARAS President Jorge Roig, head of the nation's largest business organization, also said "this is nothing more than a rationing card", a form of "managing scarcity". Roig insists the government has implemented a failed system of imports and has not supported domestic production. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/politica/capriles-el-sistema-biometrico-es-una-tarjeta-de-r.aspx#ixzz3B1ggEbSX; http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/sistema-biometrico-genera-dudas-y-prende-el-debate.aspx#ixzz3B1gJClkr; El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/roig--sistema-biometrico-es-una-tarjeta-de-raciona.aspx#ixzz3B7G0fido; and El Universal, http://www.eluniversal.com/nacional-y-politica/140822/plantean-mas-produccion-en-vez-de-las-captahuellas)

Consumers' association rejects "biometric system"
Roberto León Parilli, the president of the National Alliance of Users and Consumers (Anauco), questioned the implementation by the government of a "biometric system" to tackle the issue of shortage in Venezuela.
He stressed that installing fingerprint-reading machines in stores and supermarkets will not solve lingering shortages in Venezuela. "They (authorities) should think about this thoroughly; the country needs far-reaching solutions," he asserted. (El Universal, http://www.eluniversal.com/economia/140821/venezuelan-consumers-association-rejects-biometric-system)

Metal working industries report low steel inventories
National metal working industries have been deprived of their main supplier after labor unrest at SIDOR and a drop in steel production. The crisis is aggravated due to the lack of FOREX to import alloys. Miguel Eseverri, President of the Metal and Mining Industry Association says "we are concerned because inventories will run out in September". The industry will request US$ 600 million within the SICAD 1 system in order to order supplies to meet demand during the first semester next year. Eseverri reports US$ 143 million are required to buy basic supplies that can keep the industries running for one month. If FOREX is not available more small and medium industries will be forced to shut down. More in Spanish: (El Nacional; http://www.el-nacional.com/)


Economy & Finance

BARCLAYS reports that Venezuela's dollar assets are shrinking
BARCLAYS CAPITAL reports that the latest FOREX allocation figures divulged by CENCOEX indicate that Venezuela's FOREX deficit is deep and it has been financing itself by using up the different funds available to the government. It adds: "Nevertheless it continues to procrastinate on adjustments, distortions increase and restrictions grow lax, Venezuela's external position could continue to deteriorate, which increases country risk." More in Spanish: (El Universal, http://www.eluniversal.com/economia/140820/barclays-indica-que-se-reducen-activos-en-dolares-del-pais)

Credit Suisse: More sectors to buy FOREX at higher rates
"We forecast the government will continue to devaluate the weighted average exchange rate by shifting sectors to the lower foreign exchange rates. However, overvaluation and limited access to foreign currency will probably continue to be a factor underlying economic problems" in Venezuela, says a report by investment bank Credit Suisse. (El Universal, http://www.eluniversal.com/economia/140820/credit-suisse-more-sectors-to-buy-foreign-currency-at-higher-rates)

Maturing foreign debt pressures government accounts
Venezuela's Central Bank data shows dollar debt is no longer at comfort level after increasing dramatically by 108% between 2008 and the third quarter of 2013, which raised it to US$ 104 billion. Debt service is becoming heavy amid a shortage of available FOREX to meet both imports and debt obligations. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140822/vencimientos-de-deuda-externa-presionan-las-finanzas-publicas)

FOREX sold at preferential VEB 6.30/US$1 rate down 28%
The National Center for Foreign Trade (CENCOEX) reports that the government has been reducing the supply of FOREX to the private sector at the preferential exchange rate of VEB 6.30 per USD. During the first seven months of 2014, CENCOEX provided foreign currency for imports in different sectors of the economy, including the the Latin American Integration Association (ALADI) and the United System of Regional Payment Compensation (SUCRE), amounting to US$ 9.57 billion. This figure, according to think tank SÍNTESIS FINANCIERA, this is a drop of 28% from the same period in 2012 (Venezuelan authorities have not disclosed the 2013 statistics.) (El Universal, http://www.eluniversal.com/economia/140820/foreign-currency-sold-at-preferential-rate-down-28)


Politics

Maduro’s rating falls to 39% in poll
President Nicolas Maduro’s approval rating fell 21% this year to 39% in August, as the economy worsened, according to an HINTERLACES (pro government) poll. “The people are waiting for answers, for solutions,” says Oscar Schemel, director of the polling company, "there’s a lot of uncertainty about the direction of the economy.” Slumping popularity has made Maduro reluctant to make economic adjustments such as raising gasoline prices or devaluing the bolivar, says Eurasia Group analyst Risa Grais-Targow. The government will start rationing basic products with biometric sensors before year-end, according to the country’s price controls ombudsman. The president’s opponents are not benefiting from his weakness, with the approval rating of the main opposition alliance falling to 19% in August, said Schemel. Around 40% of Venezuelans are not identifying with either the government or the opposition, according to the poll. (Bloomberg: http://www.bloomberg.com/news/2014-08-21/maduro-s-rating-falls-to-39-in-venezuela-poll-on-economy.html)

GALLUP reports Venezuela as the most unsafe nation in the world
A global study by GALLUP shows Latin American nations as the most dangerous in the world, ahead of the African continent and Russia, and Venezuela is described as the most unsafe country globally, with only 19% of its people saying they feel safe walking at night in their own neighborhood, 74% distrust local police and 22% have suffered theft or have a relative who was robbed during the past 12 months. More in Spanish: (Notitarde, http://www.notitarde.com/Internacional/Venezuela-es-el-pais-mas-inseguro-del-mundo-segun-la-firma-Gallup/2014/08/22/347656)

Maduro pays unannounced visit to Fidel Castro
President Nicolas Maduro made a belated birthday visit to Fidel Castro, the former Cuban leader revealed in one of his regular columns. Castro's "Reflections" column posted on the official website CubaDebate said Venezuela's socialist leader dropped by Tuesday, fulfilling a promise to make a visit that Maduro made Aug. 13 as Castro turned 88. He didn't say whether the Venezuelan met with Cuban President Raul Castro or other officials. (The New York Times, http://www.nytimes.com/aponline/2014/08/20/world/americas/ap-cb-cuba-maduro-visit.html?ref=americas&utm_source=Sailthru&utm_medium=email&utm_term=%2AMorning%20Brief&utm_campaign=2014_MorningBrief-%20NYU%20PROMO082114&_r=; Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2349124&CategoryId=10717; AVN, http://www.avn.info.ve/contenido/real-friendship)

Louisiana Democrat Senator Mary Landrieu who blocked sanctions to Nicolás Maduro’s officials in the Senate said she would be “happy to endorse” that legislation once a simple paragraph is added protecting the 2,000 CITGO workers that make it possible for those who have a car in Louisiana to fill their gas tanks. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40715&idc=1)




The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Tuesday, August 19, 2014

August 19, 2014

International Trade

Inbound cargo at Puerto Cabello:
  • Over 1500 tons of automobile parts in 186 containers from China for Corporación Automotriz ZGT.
  • Over 2,200 tons of beans from China for Comercializadora El Verdugo.
  • Over 2000 livestock from Brazil for the National Agricultural Health Institute.
  • 47 public transportation vehicles from China for the government' National Urban Transport Foundation (FONTUR). 

Customs agents protest "unfair competition" by CORPOVEX
The National Association of Customs Agents (ASONAGA) and the Vargas State Chamber of Trade and Customs Agents (CADUAINCO) are protesting "unfair competition" by the government's Venezuelan Foreign Trade Corporation (CORPOVEX). "We have a long list of customs agents, cargo consolidators, and transport services charging that officials from CORPOVEZ, VEXIMCA and other government agencies have visited their clients offering an express privileged delivery service and guarantee the supply of FOREX from CENCOEX and SICAD 1, if they are given a power of attorney to handle their cargo", says a joint statement issued by both organizations. They additional charge that "conditions are created for blackmail, unfair competition, and the end of private agencies, proxies, transport and storage services". At La Guaira there are an estimated 350 customs agents, that provide 2000 direct jobs; and another 450 companies that provide such services at Puerto Cabello. More in Spanish: (El Universal: http://www.eluniversal.com/economia/140819/denuncian-competencia-desleal-de-corpovex)

Chinese company to ship heavy duty trucks to Venezuela
China, the Venezuelan Ministry of Transport, and the Venezuelan Foreign Trade Corporation (CORPOVEX) have signed a contract to import 5,239 heavy duty trucks - worth US$ 274 million - from JAC Motors.
JAC will also provide Venezuela with technical assistance and automotive training for the Venezuelan staff. This is the largest order of heavy duty trucks a Chinese automobile manufacturer has received outside mainland China. (El Universal, http://www.eluniversal.com/economia/140818/chinese-company-to-ship-heavy-duty-trucks-to-venezuela)


Logistics & Transport

US FAA group to inspect airlines operating toward Venezuela
General Luis Graterol, Minister for Air and Aquatic Transportation, says a group from the US Federal Aviation Authority will visit Venezuela to inspect airlines serving this country. More in Spanish: (El Nacional; http://www.el-nacional.com/)


Oil & Energy

Venezuela oil price drops to lowest level since 2012 even as Mid-East and Ukraine simmer
Venezuela's weekly oil basket fell to its lowest since June of 2012 as oil prices around the world moderated even as crises in Ukraine, Syria, Libya, Iraq and Israel boiled over as international oil markets seemed well-supplied.
According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending August 15 was US$ 91.95, down US$ 0.27 from the previous week's US$ 92.22. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2347836&CategoryId=10717; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40654&idc=4)


Commodities

Pasteurized milk production is down 90% in two years
Roger Figueroa, President of the Dairy Industry Chamber (CAVILAC) reports that production of pasteurized milk has dropped 90% over the past two years due to frozen prices on natural milk. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/produccion-de-leche-pasteurizada-ha-caido-90-en-do.aspx#ixzz3Apxcr1hg; El Mundo, http://www.elmundo.com.ve/noticias/economia/gremios/produccion-de-leche-pasteurizada-ha-caido-90--en-d.aspx

SIDOR workers will evacuate administrative staff in order to paralyze the state-owned plant completely, as per a decision taken in a workers’ assembly held outside SIDOR - in which they also burned the SIDOR’s newsletter that published an agreement reached by SUTISS’ Organization Secretary and the regime. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40652&idc=3; El Universal, http://www.eluniversal.com/economia/140818/venezuelan-iron-and-steel-company-sidor-resumes-operations)


Economy & Finance

Central Bank disposable reserves have dropped 44%
Central Bank accounts for the first semester 2014 show disposable FOREX is now at US$ 1.752 billion, a drop of 44% from the same period in 2013. This implies there is no way to meet market demand for FOREX. In addition, PDVSA is only providing the bank with half the amount of oil dollars as production is stagnant and crude oil sales at a discount reduces FOREX income. More in Spanish: (El Universal; http://www.eluniversal.com/economia/140819/se-reducen-44-las-reservas-liquidas-en-el-banco-central)

Ramirez now says Venezuela may have two foreign exchange rates by the end of the year
Economic Affairs Vice President Rafael Ramírez is now saying the nation may have two different exchange rates - as opposed to the current three - by the end of the year, in order to simplify matters. However, he said that before doing so the government would seek to curb inflation, raise the price of gasoline, and promote a "fiscal revolution" - of which no details have been provided. He added "this (situation) is unsustainable, because we must take decisions to balance our affairs or we will have disturbances in our economy". More in Spanish: (Infolatam)

Priority sectors face distortions amid economic controls in Venezuela
The Venezuelan government has not managed to correct the distortions resulting from FOREX and price controls. Serious difficulties in accessing foreign currency are increasingly hitting productive capacity and jeopardizing the supply of priority goods. Price controls have undermined both production and the supply of food. This translates into shortages that have reached other priority sectors such as healthcare, where shortages of medicines have become more obvious. Economist Luis Vicente León, president of the DATANÁLISIS polling firm believes that "fear of the political and economic costs involved" are the reason why the Executive Office has delayed the necessary decisions to set the economy straight, because of their negative consequences in the short term. (El Universal, http://www.eluniversal.com/economia/140818/priority-sectors-face-distortions-amid-economic-controls-in-venezuela)


Politics

Maduro cabinet resigns "to contribute to the government's transformation process"
Executive Vice President Jorge Arreaza says Venezuela's cabinet has tendered their resignation in order to contribute to the process of transforming government, which President Nicolás Maduro has called "the shakeup". More in Spanish: (AVN; http://www.avn.info.ve/contenido/gabinete-ministerial-pone-cargos-orden-para-contribuir-proceso-transformaci%C3%B3n-del-estado; El Universal, http://www.eluniversal.com/nacional-y-politica/140819/ministros-ponen-cargos-a-disposicion-de-nicolas-maduro)

Survey shows Venezuela's poorest sectors blame problems on the government
Venezuela's poorest sectors believe President Nicolás Maduro has the main responsibility for the country's problems.
According to a survey conducted by research firm DELPHOS among Venezuelans belonging to strata C, D, and E, six out of ten people blame the President or his government for the two main problems in the country: Insecurity (73%) and the economy (64%), including shortages, unemployment, and inflation. When asked about the main problems facing the communities, people's main complaint refers to public utilities (78%), followed by insecurity (57%), shortages (27%), garbage disposal (18.5%), and roads (17.6%). (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/venezuelas-poorest-sectors-blame-problems-on-the-government)

Opposition reaffirms unity, agrees on key points aiming at parliamentary elections
Representatives of the 25 parties and groups that make up the Democratic Unity Conference (MUD) have agreed on seven key points to continue their united effort after months of divisive language and changes at the head of the coalition. They agreed to a politically acceptable unity movement, with all individual initiatives subject to consensus, the end of separate projects, a non-aggression agreement among all parties, and targeting the regime as the common rival. They reportedly established the key guidelines for a strategic plan to renew their popular, democratic, peaceful and electoral goals, and to remain united beyond elections. More in Spanish: (Infolatam)

Mayors' association reports decentralization may end in Venezuela
The Board of Directors of the Venezuelan Association of Mayors denounced that the central government is seeking to eliminate regional decentralization here. Carlos Ocariz, mayor of Sucre municipality in Caracas, reports that the 335 mayoralties in Venezuela have budget deficits due to cutbacks in central government contributions, and voiced concerns that local municipal expenditures exceed income. (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/mayors-association-reports-decentralization-might-end-in-venezuela)

Venezuelan aircraft with humanitarian supplies for Palestine has arrived in Egypt
An aircraft bearing 12 tons of humanitarian supplies from countries within the Bolivarian Alliance for the Peoples of Our America (ALBA) for the Palestinian people has arrived in Egypt, to be transferred to the Gaza Strip. (AVN, http://www.avn.info.ve/contenido/venezuelan-plane-humanitarian-supplies-palestine-arrived-egypt; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40666&idc=1)

Colombians demonstrate against Venezuela's actions on the border
Access through Simón Bolívar de San Antonio and Francisco de Paula Santander de Ureña bridges on the Venezuelan-Colombian border has been restrained by demonstrators in rejection to strict security measures carried out by Venezuelan authorities in an attempt to deter smuggling. Workers from the informal sector claim they have been hit by the decision to restrain access on the border at night. (El Universal, http://www.eluniversal.com/nacional-y-politica/140818/colombians-demonstrate-against-venezuelas-actions-on-the-border)



The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.

Friday, August 15, 2014

August 15, 2014

International Trade

Inbound cargo at Puerto Cabello:
  • 23,000 tons of wheat from Canadá Gavilon Grain for Pasta Sindoni C.A.
  • 13,980 tons of beef and chicken in 417 containers, from JBS SA for CASA
  • Over 8,999 tons of wheat from Desa Industries in the US for La Lucha C.A.
  • 4,229 tons of frozen beef, chicken and milk from Frigorífico de Aves Soychu Saicfia, Noelma S.A., Bonnin Hermanos SH y Sancor Cooperativas Unidas for CASA.
  • Over 1,740 tons of milk and margarine from JBS SA for CASA
  • Over 980 tons of fertilizer from Rusia Open Ipint Stock Company for BARIVEN
  • Over 770 tons of chicken from por Brf S.A. Rua Jorge and GDC Alimentos S.A. for CASA.
  • Over 660 tons of milk from Sancor Cooperativas Unidas for Corporación de Abastecimiento y Servicios Agrícolas (CASA)
  • 578 tons of chicken from Argentina for CASA
  • 563 tons of milk also from Argentina for CASA
  • 319 tons of auto parts from General Motors Overseas for its subsidiary in Venezuela
  • Over 307 tons of frozen chicken from Brazil, for CASA
  • Over 207 tons of unsalted butter from Uruguay, for CASA

22% of all imports come from the US
Data from the National Statistics Institute shows that imports from the US during the first four months of 2014 were 22% of all imports, for a total US$ 2.665 billion, a 26.36% drop from the same time the year before. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140813/compras-a-eeuu-representan-22-de-las-importaciones)

Venezuela to import personal care products
The government will import personal care products facing serious shortages with an additional credit of US$ 124.46 million just approved by the National Assembly. A report by the Finance Committee of the Assembly shows that state-run Venezuelan Industrial Supplies (SUVINCA) will be in charge of purchasing toilet paper, toothpaste, toilet soap, deodorants, shampoo, and razors to be distributed nationwide through private and public networks. (El Universal, http://www.eluniversal.com/economia/140814/venezuela-to-import-personal-care-products)

Colombia disagrees with Venezuela's decision to close the border
Colombia's Ministry of Foreign Affairs has voiced "disagreement" with Venezuela's decision to restrain access on the border in the evenings in order to fight against smuggling. Colombian Foreign Minister María Ángela Holguín remarked it was a unilateral decision adopted by the government, and said "We believe closing the border is not the action needed to deter smuggling, which requires other internal moves." (El Universal, http://www.eluniversal.com/economia/140813/colombia-disagrees-with-venezuelas-decision-to-close-the-border)

1,000 tons of food seized at the Venezuela-Colombia border
The speaker of the Táchira state legislature, Omar Hernández, of the government party, claims 1,000 tons of foods were seized on the first night authorities restrained access on the border to avoid smuggling. He also says 408 clandestine border crossings have been found by the military. (El Universal, http://www.eluniversal.com/economia/140813/one-thousand-tons-of-food-seized-on-the-venezuela-colombia-border)


Logistics & Transport

Venezuelans must go through fingerprint scanners to activate their credit cards for use abroad after being authorized by the CENCOEX, according to a new announcement by Prosecutor General Luisa Ortega. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40629&idc=2)

Izarra says ALITALIA to resume operations in Venezuela on August 18
Tourism Minister Andrés Izarra says Italian airline ALITALIA will resume operations in Venezuela next August 18. (El Universal, http://www.eluniversal.com/economia/140814/alitalia-to-resume-operations-in-venezuela-on-august-18)


Oil & Energy

Venezuela reported to have tapped Lazard to sell CITGO Petroleum
Venezuelan state oil company PDVSA is working with investment bank Lazard Ltd to sell its North American unit, Citgo Petroleum Corp, according to people familiar with the situation. Petroleum Minister Rafael Ramirez said on Aug. 5 that the country will look to exit CITGO "as soon as we receive a proposal that serves our interests." He also said: "Assets abroad are virtually hostage to other jurisdictions and pay US taxes". A potential sale would be Venezuela's biggest pullback ever from the U.S. refining market. (Reuters, http://www.reuters.com/article/2014/08/12/citgo-pete-refinery-sale-idUSL2N0QH1YZ20140812; and more in Spanish: Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/ramirez-venta-de-citgo-no-es-un-tema-prioritario.aspx#ixzz3AMio3OSU; El Mundo, http://www.elmundo.com.ve/noticias/economia/empresas/ramirez--venta-de-citgo-no-es-un-tema-prioritario.aspx)

Venezuela as a distressed seller. Venezuela is digging its way to distressed seller status. The country wants to offload CITGO, its American refinery and pipelines unit. It may be worth up to US$15 billion, money that’s sorely needed because of President Nicolás Maduro’s foolish economic policies. And the drop in value of heavy-oil assets like CITGO owns makes it a bad time to sell. Maduro’s administration is running out of cash. That’s the result of anti-business policies — including price controls and nationalization — that have depressed local production and increased reliance on imports. Access to dollars is rationed by a complex three-tier exchange rate that favors government projects over the private sector. It has led to shortages of food and medical supplies, which explains PDVSA’s timing in putting its United States division up for sale. In recent years demand has weakened and prices fallen for the kind of heavier oil refining that accounts for about three-quarters of CITGO’s output. American refineries now make more from processing the light crude from the shale boom. Processing heavy crude may pick up again, especially if the Keystone pipeline between Canada and the United States is approved. There are some valuable assets in PDVSA’s outfit in the United States – not least terminals and pipes. That should give Lazard, which has just been appointed as adviser, something to work with. Much of the proceeds from the sale, though, will probably have to cover the goods shortages. This means little, if any, of the cash is likely to be invested to reverse the decline in PDVSA’s oil output. With the company now supplying over 95% of the nation’s hard currency, more neglect will only worsen Venezuela’s plight, increasing the need to raise cash. Potential CITGO buyers may be in for a fire sale. (The New York Times, http://dealbook.nytimes.com/2014/08/14/venezuela-as-a-distressed-seller/?_php=true&_type=blogs&src=twr&_r=0)

PDVSA ponders bond swap to ease debt payment
State-run oil holding Petróleos de Venezuela (PDVSA) must meet US$ 4.3 billion debt payments during the second half of 2014, and us considering the possibility of swapping bonds due this year. (El Universal, http://www.eluniversal.com/economia/140814/pdvsa-ponders-bond-swap-to-ease-debt-payment)

PDVSA will begin a "popular consultation" over the gasoline price hike, announced multi-office holder Rafael Ramírez. The regime’s “popular consultations” usually mean telling captive audiences (PSUV meetings) of decisions already made for support by acclamation. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40623&idc=4)

And now PDVSATV
The new television station will broadcast three hours a day in its test period; from 7 A.M. an 8 A.M., from 12 to 1 P.M. and from 7 P.M. to 8 P.M., in this first stage. It can be tuned via TSD’s 2504 or on the Internet. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40613&idc=4)


Commodities

SIDOR workers call those who signed the collective bargaining agreement with the government "traitors" and call for their resignation. The 108 clause agreement on behalf of 14,500 workers at Venezuela's largest steel producer was reached by Deputy Minister of Labor, Nestor Ovalle and the SUTISS union’s Organization Secretary José Meléndez and three other workers Neither the SUTISS Chief José Luis Hernández, Claims Secretary Leonardo Azócar, nor Secretary General Julio López attended that meeting. Those who attended say what they “agreed” upon with authorities must be ratified in a workers’ assembly. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40628&idc=3; and more in Spanish: AVN, http://www.avn.info.ve/contenido/new-sidor-collective-bargaining-was-signed-early-thursday; http://www.avn.info.ve/contenido/signing-collective-agreement-sidor-protects-more-14000-workers)


Economy & Finance

Value of gold reserves went down 24% in a year and a half
From December 2012 to June this year Venezuela's Central Bank was forced to adjust the value of its gold reserves from US$ 1.686 to US$ 1.290 per troy ounce. More in Spanish: (El Universal, http://www.eluniversal.com/economia/140815/las-reservas-en-oro-acumulan-caida-de-24-en-ano-y-medio)

Family’s food basket was Bs.12,689.78 in July, up Bs.733.92 or 6.1%, according to the Venezuelan Teachers’ Federation’s Documentation and Social Analysis Center (CENDAS-FVM, in Spanish). The basket has increased 96.1% in a year (July 2013-July 2014). (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40621&idc=2)


Politics

Judge upholds dismissal of López evidence, he replies: "This is to be a firing squad, not a trial"
In the hearing held on Wednesday against opposition leader Leopoldo López, Judge Susana Barreiros dismissed his defense attorney's attempts to produce arguments and evidence attesting to the leader's innocence. The trial is to continue next August 28. Legal counsel Roberto Marrero has stressed Lopéz's trial cannot be deemed formal because defense attorneys have been prevented from presenting the arguments and evidence aimed at proving López's innocence. Upon hearing again that proof on behalf of his defense will be barred, López said: "This is to be a firing squad, not a trial".  (El Universal, http://www.eluniversal.com/nacional-y-politica/140813/judge-upholds-dismissal-of-lopezs-evidence; and more in Spanish: http://www.eluniversal.com/nacional-y-politica/140814/lopez-denuncio-que-su-juicio-es-un-paredon-de-fusilamiento)

SPECIAL INFOLATAM REPORT: ¿Where is the Maduro regime headed?
The next few months are vital to the continuation and consolidation of the Maduro regime, basically because he must take difficult decisions on the economy and close the gaps that are dividing the "chavista" movement. Everything indicates the center of the regime pivots between Maduro, National Assembly president Captain Diosdado Cabello, and Economic czar Rafael Ramírez - circumstantial allies who define the economic and political course of the government. Military affairs expert Rocío San Miguel, says that “pragmatism which joins Cabello and Maduro is much more profitable than voracity. Maduro has understood that oil and the Armed Forces are the source of power in Venezuela and is making an effort to understand and control that area, which I doubt he can achieve because the military base is very powerful”. Which are the next steps?:

  • Deepening political authoritarianism. Diosdado Cabello's position seems to have prevailed, against all dialogue with a divided opposition. Political analyst Alberto Barrera says "an opposition that is increasingly absent from major media and seems disoriented and divided...the great reverse is that unity is the agenda for Unity."  Possibilities for negotiation are closed. Cabello has said: "I have no time to meet with you, you will never rule this country again".

  • Snuffing out internal strife. The recent PSUV party meetings were used to snuff out internal criticism and dissent. As described by political analyst Luis Vicente León: "Maduro has no options but to advance leaving the dinosaurs aside. Maduro cannot give them space to contaminate his space, so he plays hard and furiously attacks anyone who challenges him...going toward toward the Pary Congress the message toward even the mildest dissidents is 'anyone who slips up loses' .

  • Coming devaluation. The economy needs urgent action not taken since Hugo Chavez died in March 2013. The most probable steps are a devaluation, deeper cuts into subsidies, and higher service charges.  Expert Annabella Abadi says: "Through a devaluation the government can get more bolivars with the same amount of dollars, which would reduce the deficit." 
More in Spanish: (Infolatam)

UNASUR’s 8th Summit has been postponed to October. Uruguay’s Foreign Affairs Ministry says the meeting scheduled to take place in Montevideo next August 21 and 22 is postponed due to conflicts in presidential agendas. Colombia's former President Ernesto Samper was to take over the Secretariat from Venezuela's Alí Rodríguez Araque, and Suriname was to transfer the pro tempore presidency to Uruguay. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40630&idc=1)

One of Chávez’ daughters, María Gabriela, was appointed alternate ambassador to the United Nations (UN) on Wednesday. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=40622&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140814/chavezs-daughter-designated-alternate-ambassador-to-the-un)




The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.