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.

More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-un-mes-en-bahia-de-Puerto-Cabello-tiene-buque-con-maiz-/2014/08/20/347493; http://www.notitarde.com/La-Costa/Llegaron-mas-de-16-mil-toneladas-de-alimentos-2218899/2014/08/19/347160

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.