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, April 8, 2014

April 08, 2014

International Trade

Inbound cargo at Puerto Cabello, mainly construction material and foodstuff
  • 18.951 tons of bagged cement from Aveiro, Portugal for PDVSA Industrial.
  • 15.999 tons of US wheat for MOLINOS CARABOBO
  • Two batches with over 15.000 tons of sémola durum for Molinos Carabobo.
  • 13.000 tons of yellow corn and 6.000 tons of bulk soybean meal from Argentina, for several importers.
  • 12.000 tons of yellow corn from CARGILL for AGRIBRAND PURINA and AVÍCOLA MAYUPAN
  • 11.999 tons of American soy flour, in 2 batches
  • 11.999 tons 859 kg of American soy flour from United States for IND Pollo Premium and Alimentos del Centro Alceca
  • Over 6,000 tons of Argentine soy bulk of Industrias Oleaginosas, in 2 batches for Seravian and Agribrand Purina.
  • 6.000 tons of soda ash from Solvay Chemicals for Venezolana del Vidrio
  • Over 2.000 tons of sulfate and 6.000 tons of phosphate from US Mosaic Corporation for PEQUIVEN
  • Over 1,847 tons of frozen chicken in 48 containers, from Jamaica for the government's CASA Corporation.
  • 1. 422 tons of cattle standing from Brazil's SCT Artigas
  • 895 tons of Portuguese cement for PDVSA Industrial.
  • Over 880 tons of roofing in 166 containers, from Italpanelli Ibérica for PDVSA, along with several tons of construction kits and other building material. 
  • Over 851 tons of semola durum spaghetti in 33 containers, from Jamaica for CASA.
  • Over 665 tons of beef in 24 vans, from Jamaica for CASA.
  • 572 tons of paper towels
  • 563 tons of toilet paper for different consignees
  • Over 524 tons of bottled soy oil in 23 containers, from Bunge in Jamaica, for CASA
  • 330 tons of frozen chicken for CASA
  • Over 177 tons of concentrated milk in 7 containers, from Jamaica, for Industrias Maru. 
  • Over 109 tons of tissue napkins in 9 vans from Trinidad, for Papeles Venezolanos. 

Government food imports rose 51%
Government food distribution networks were supplied by imports during 2013, according to a report by the Ministry for Nutrition. The report indicates the government's Agricultural Supplies Corporation (CASA) bought 4,911,099 tons of foodstuff during the year, of which 87.52% was purchased on international markets (about 4,298,196 tons) and only 12.48% (612,993 tons) came from local producers. CASA imports rose 51% in 2013: Including, 4.298.196 tons of foodstuff; 624,600 tons of white and paddy rice, chicken, sugar, black beans, meat, milk, crude palm oil and refined soybean oil and soybean arrived in agreements with Argentina, Belarus, Brazil, Bolivia, Guyana, Nicaragua and Uruguay. More in Spanish: (Ultimas Noticias,

Panama import debts under scrutiny by Venezuelan authorities
A report by CENCOEX (formerly CADIVI) indicates that 5,748 requests for FOREX to be applied to imports from Panama came from companies that were subsequently suspended or excluded from the system. This reflects a total of U$D 1.192 billion. The report includes a list of 412 companies that were under investigation. It also shows over 5,000 approvals for imports from 1006 exporters in Panama, which would mean the net debt owed by the Venezuelan government institution (CENCOEX) could be U$D 1.305 billion. More in Spanish: (Ultimas Noticias,

Oil & Energy

Venezuela: Producing oil amid political unrest
Concerns abound as to whether Venezuela's recent political unrest will eventually disrupt the flow of oil exports. But the biggest threat to Venezuelan oil production is not the protest movement but the continued degradation of the energy sector. PDVSA has never fully recovered from losing 40% of its experienced personnel after the 2002 strike, and it has since been made responsible for financing several social causes, which have drained its resources and reduced investment in exploration, production and maintenance. Combined with subsequent energy nationalizations, these factors have prevented PDVSA from producing at pre-2002 levels. Since foreign oil company holdings were nationalized in 2007, only a few countries -- mostly China and Russia -- have been willing to invest in Venezuela's energy sector. Some investors have become more willing lately, with companies striking U$D 10.4 billion worth of financial deals over the past year. These include CHEVRON, GAZPROM, China National Petroleum Corporation, Italy's ENI and Spain's REPSOL. These funds are being borrowed by Venezuela on the condition that it will then be reinvested in joint projects between those companies and PDVSA. The official goal of this round of financing has been to add more than 200,000 barrels per day over the next several years. But given the challenges facing the energy sector, not to mention declining output of older fields, added production may only compensate for declines elsewhere, assuming the goals are reached. Rising costs are also affecting companies that operate in Venezuela. This includes inflation, which reached 56% percent in 2013. The effect of inflation can be seen clearly in the recent agreement between the government and the Federation of Venezuelan Oil Workers on Feb. 5, when the government agreed to a 90% salary increase for the two-year contract. Also, the difference between the black market and official exchange rates also affects oil companies significantly. Though oil companies have been granted a more favorable exchange rate of VEB 11.3/U$D, the service providers they work with are frequently forced to use the black market rate. Meanwhile, shortages of other goods, including cement and steel, have hurt the energy sector by creating delays in production. Not only do the economic conditions discourage investment, but political unrest has raised doubts about the government's ability to manage the delicate domestic situation. With such low oil production and export rates, there are fewer dollars in Venezuela's domestic market to finance imports, which will only perpetuate ongoing shortages of basic goods and drive further unrest. The low price of gasoline has encouraged high consumption, which is compounded by all the fuel that is smuggled to Colombia. What fuel is consumed at home cannot be sold by PDVSA abroad, so foreign currency reserves will continue to dwindle -- they fell by nearly U$D 10 billion in 2013 alone. Right now, PDVSA has no choice but to absorb these costs until the government is ready to accept the political consequences of raising prices on consumers. (Stratfor,

Venezuela oil price slips
Venezuela's weekly oil basket stayed below the country's desired U$D 100 a barrel floor, slipping as Brent oil fell and WTI oil prices moved up toward each other. According to figures released by the Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending April 4 was U$D 95.27, down U$D 0.14 from the previous week's U$D 95.41. (Latin American Herald Tribune,


Continuing shortages
According to DATANÁLISIS, the lack of basic foods on the store shelves has reached worrisome levels. During the first two months of this year the shortage of regulated products rose to 47.7%, which implies an unstoppable advance, compared with the behavior in recent years. According to the numbers reported by the consulting firm, in 2012 the shortage level was 15.9%, and rose to 37.2% a year later. More in Spanish: (El Universal,

Economy & Finance

BARCLAY's is now estimating SICAD II will provide U$D 8.4 billion in FOREX
In a revised report on the new SICAD II FOREX allocation system, BARCLAY's Capital estimates it will provide U$D 8.4 billion, down from its original estimation of U$D 11.6 billion of 24 March. The report says "supply grew during the first week, but dropped considerably toward the end of the past week". More in Spanish: (El Universal,

Government allows exchange bureaus to bid within SICAD II, brokers return to the market
Exchange bureaus may now trade within the ancillary exchange market SICAD II. According to the latest provision their involvement will be regulated by the Central Bank. “Four bankers from ECONOINVEST served two years and seven months in jail without ever being tried or convicted when the law was changed after they were arrested and applied to them retroactively,” says Russ Dallen, head trader at Caracas Capital Markets. “In the sad comedy of errors that Venezuela’s economic management has become, the charges against the bankers were dropped when the law was changed again in January of this year.” (El Universal,; and Latin American Herald Tribune,

Venezuela ranks below Cuba on private property rights
Venezuela's record on private ownership rights ranks among the worst in the world, as shown by the Social Progress Index, prepared by the US non-profit group Social Progress Imperative. In a list of 132 nations, Venezuela ranked 130, running last in Latin America, even after Cuba and other nations with stringent private property policies. The index, which also assesses public utilities, gave Venezuela the 113th position among 132 nations in electricity supply. (El Universal,

Land takeovers slowed down in 2013
A report from the Agriculture Ministry shows government land takeovers slowed down during 2013. 43,620 hectares were taken over last year, as opposed to 550,495 hectares grabbed by the regime in 2012, for a drop of 92%. More in Spanish: (El Mundo,


Maduro accepts proposal to meet with opposition
President Nicolas Maduro says he has accepted a proposal of the foreign ministers from the Union of South American Nations to meet with representatives of the opposition. “We had a rather broad conversation. They proposed to me to have a meeting with the opposition delegation and, well, I accepted, as I’ve been calling for political dialogue, for peace, for democracy for eight weeks,” said Maduro after meeting with the diplomats. (Latin American Herald Tribune,; Veneconomy,; AVN,; El Universal, and; More in Spanish: CNN,

Opposition leadership sets conditions for talks with Maduro
In a letter to the UNASUR Foreign Ministers, the opposition's United Democratic Conference (MUD) has stated that it would talk to the government "on equal footing", and that the first meeting should be fully televised live nationwide. They also wrote that they expect to establish an agenda that establishes as its priorities an Amnesty law for all political prisoners, an independent Truth Commission to investigate crimes committed over the past weeks, a balanced renewal of powers such as the Elections Board and the Supreme Court, and disarming civilian paramilitary groups. The opposition's leadership says that - contrary to prior reports - UNASUR has not set up a committee of 3 foreign ministers to facilitate talks, and that the government has not formally invited the Vatican to take part, which they  the opposition - consider "essential" for talks. More in Spanish: (El Universal,

Opposition leader formally charged
Jailed opposition leader Leopoldo Lopez was formally charged Friday with inciting violence at an anti-government protest that has been followed by weeks of unrest across Venezuela. Chief prosecutor Luisa Ortega Diaz announced the charges a day before the legal deadline to make the case for keeping Lopez in custody. The Harvard-educated Lopez has become a cause celebre among opponents of President Nicolas Maduro during the month and a half he has spent in a military prison outside the capital. (The Washington Post,; Fox News,

Latin American legislators have asked the International Criminal Court to prosecute Maduro
A group of Latin American legislators have asked the International Criminal Court at The Hague to formally prosecute President Nicolás Maduro for "systematic" human rights violations against opponents demonstrating in Venezuela's streets. Perú's Cecilia Chacón said: "There are already 40 dead, aside from crimes against humanity such as tortures and kidnappings." More in Spanish: (El Universal,

Spain suspends exports of riot control material to Venezuela
Spain has indefinitely suspended the export of riot control equipment to Venezuela’s government following weeks of unrest there which have seen an increase in violence as police face sustained protests by the opposition. Foreign Minister Jose Manuel Garcia Margallo said “it is a fact” that Spain has suspended sales because “it is logical not to add fuel to the fire when there is a conflict.” The decision was made by a government panel March 6, but only now confirmed publicly. Garcia Margallo said Spain has a special interest in Venezuela because 200,000 Spaniards live there. (The Washington Post,; Fox News,

Student leaders reports threats
Juan Requesens, president of the Federation of University Councils (FCU), reports that members of the Student Movement have been threatened via social networks by pro-government individuals. "My fellow students have been threatened via social networks; their telephone numbers have been shared. Paramilitary groups have been asked to look for them. Their (students') addresses and IDs have been posted; their capture has been ordered because they are fascist; pictures of their relatives have been leaked; they have been declared military targets. The government will not intimidate us. It will not frighten us; we will keep on demonstrating in the streets," Requesens said. (El Universal,

TV journalist kidnapped by armed men
The father of a Venezuelan TV journalist says his daughter has been kidnapped by armed, masked men in the western section of the capital of Caracas. Luis Pinto reports that his daughter Nairobi Pinto was taken hostage Sunday afternoon at the entrance to the building where she lives. She is the chief of correspondents for the GLOBOVISION news channel and her whereabouts remain unknown. The elder Pinto called on the kidnappers to free his daughter during an interview with the local broadcaster Union Radio. Police officials have not commented on the case. (The Washington Post,

Oppenheimer: Danger of a coup in Venezuela
According to a study by the Netherlands based Global Partnership for the Prevention of Armed Conflict (GPPAC), the "most probable" scenario for Venezuela is anarchy, followed by "the possibility of intervention by the nationalist-institutional segment of the armed forces". Partnership co-chair Andres Serbin says those segments of the armed forces resent Cuban military advisors and the creation of paramilitary groups. In addition, they do not want to engage in repressing demonstrations by the opposition. Some local analysts are skeptical about the possibility of a military coup because of the degree of military control already in effect within the government. Others argue that Venezuela has already undergone a slow motion military coup with over 1600 officers in government positions. 25% of the Maduro cabinet, including the powerful Ministries of the Interior and Finance, and 52% of the governorships are in the hands of active or retired officers. In addition, Maduro has created a record number of officers: Venezuela has 1200 generals in a force of 120,000 soldiers. However, they say Chavez had a firm grip on the military whereas Maduro is a weaker president who is controlled by the military in many areas. Rocío San Miguel, who heads Control Ciudadano, a group that keeps close watch over the military says: "Under Chavez the military were under vertical control. Now military control is atomized, with the military holding parcels of power, with no control whatsoever." Serbin concludes that unless there are meaningful negotiations between the regime and the opposition, the alternative could be "a military coup, or a self-coup by the government itself, with an even greater cycle of violence that could end up in a civil war." More in Spanish: (Infolatam)

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.

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