Brazil Commodities Slammed As Nationwide Strike Intensifies, GDP Estimate Down 38%

  • Brazil's nationwide truck driver strike has entered its 10th day

  • Key exports have been severely affected, from beef and soybeans to coffee and cars

  • Bloomberg cuts GDP growth estimate from 3.2% to 2%, a decline of 37.5%

  • Concessions made to truckers will cost the Brazilian government 14.4b Real (US$3.85 Billion) throughout the remainder of 2018 

  • Lower GDP may reduce revenue by additional 20b-25b reais, or 0.25% of GDP, could force govt to cut expenditures further by 3b-10b reais to meet 159b-real fiscal deficit target (Bloomberg)

  • Brazilian oil workers began a 72-hour strike on Wednesday, and have demanded that Petrobras fire CEOP Petro Parente while permanently lowering fuel prices

  • Millions of chickens have been prematurely slaughtered as feed failed to reach farmers

The situation in Brazil has gone from bad to worse, as the nationwide trucker strike has expanded into a strike by oil workers, who began a 72-hour strike on Wednesday - affecting several rigs, plants, refineries and ports in the latest challenge for state-owned oil firm Petroleo Brasileiro SA, whose shares have fallen roughly 30% in two weeks. Brazil produces approximately 2.1 million barrels of oil per day, making it Latin America's largest producer of crude. 

The oil worker strike is yet another blow to conservative President Michel Temer, as Brazil's political climate is fiercely polarized. 

Late on Tuesday, Reuters reported that Temer was considering an overhaul of a market-based fuel pricing policy at Petrobras, which could provoke even more investor flight. Temer’s office said in a Wednesday morning statement that he would preserve the policy.

The oil sector strike included workers on at least 20 oil rigs in the lucrative Campos basin of 46 operated by Petrobras, as the company is known, according to FUP, Brazil’s largest oil workers union. Petrobras said any disruption would not have an immediate major impact on its production or overall operations. -Reuters

The strike has crippled virtually every major industry countrywide, while key commodities such as soybeans, beef, coffee and cars have been severely affected

Most export terminals ran out of soybeans for shipments scheduled for Tuesday and Wednesday, Lucas Trindade de Brito, manager at export group Anec, said in a telephone interview.

Among Brazil’s 109 beef plants, 107 suspended operations and two are running below 50% of capacity, exporter group Abiec said in an email.

Exports of 40,000 tons of beef haven’t been shipped as planned, and thousands of trucks loaded with perishable products, including boned meat, are halted on roads.  -Bloomberg

Alas, the strike has also triggered the premature slaughter of millions of chickens after vital feed failed to reach farmers. 

The government announced Sunday that it will cut taxes on diesel fuel, while freezing the price for 60 days followed by a monthly adjustment going forward. The measures will reportedly cost around 9.5 billion reais (US$2.6 billion) through the end of the year, which led Bloomberg to cut GDP growth estimates from 3.2% to 2%. 

The measures will cost about 9.5 billion reais ($2.6 billion) through the end of the year, Finance Minister Eduardo Guardia said Monday at a news conference. Part of that bill will be covered by using a government contingency fund and by erasing payroll-tax cuts enjoyed by some industries, but other, as-yet undisclosed, measures will also be required, Mr. Guardia said.

“The loss of tax revenue will need to be compensated,” he said. -WSJ

Meanwhile, as hundreds of demonstrations rage across the country, many are calling for the country to return to a dictatorship that ran for two decades until 1985

“We need help from the military to resolve our problems in Brasília, to remove the bandits from there and to put the house in order,” said one driver, Gabriel Berestov, 44.

José Lopes, leader of the Brazilian Truck Drivers’ Association, warned on Monday that the strike movement had been hijacked. “There is a very strong group of interventionists,” he told reporters. “They are people who want to bring down the government.”

The subject ricocheted around Brazil. On Tuesday, Temer told foreign journalists he saw “zero risk” of a military intervention. His minister of institutional security, Gen Sergio Etchegoyen, said the armed forces had no intention of intervening and that the idea was a “subject from the last century”.

The theme is deeply controversial in Brazil, which lived under a military dictatorship for 21 years, during which hundreds of regime opponents were executed and thousands more tortured. -The Guardian

Around 15-20% of Brazilians support military intervention, according to Marcus Melo, professor of political science at the Federal University of Pernambuco. 

“Those who are still mobilising are militants and outliers,” he said. “We are in a situation of social convulsion.”

Comments

nmewn MagicHandPuppet Wed, 05/30/2018 - 20:05 Permalink

Yes, when they are not destroying art & statuary while proclaiming to love art & statuary...or suppressing free speech, while proclaiming to be the protectors of free speech...or being for women's rights, while lining their pockets with Weinstein cash...they are DOUBLING THE TAX ON DIESEL fomenting a strike by drivers who can no longer make a profit. 

I swear, it doesn't matter what the skin color, nationality or culture, a fucking socialist is always easily identified by the spots...lol.

In reply to by MagicHandPuppet

beemasters nmewn Wed, 05/30/2018 - 20:28 Permalink

Six million chickens. The day will be remembered as Holochick. The cocks and hens will ensure their chicks never to forget the world is out to get them. So they must first conquer the world and call the worms terrorists. Anyone who protests shall be labelled anti-chickenistic.

In reply to by nmewn

the artist MagicHandPuppet Wed, 05/30/2018 - 21:10 Permalink

Along those lines...this is really about expanding debt and real (not Real) inflation. The chickens are coming home to roost. In first world countries they can hide inflation in things like Hedonics...but in third world countries there is no margin to skim. When they skim anyway they get themselves some consequences. 

So now what? Brazil Central State will order the Central Bank to print and pass off this problem to the rest of Brazil until that too unwinds. 

I think the world is waking up to this shit as more and more people make the connections.

In reply to by MagicHandPuppet

flapdoodle TBT or not TBT Wed, 05/30/2018 - 21:00 Permalink

What I think you mean is that Zuckerberg Jewed the Winklevoss brothers out of their original idea after these poor saps made the mistake of hiring Zuckerberg to make some changes to their software...

The Winklevoss brothers went on to sue Zuckerberg, got several millions of dollars winning the settlement, invested it in BitCoin many years ago and are now Bitcoin billionaires.

In reply to by TBT or not TBT

Xredsx DennisR Wed, 05/30/2018 - 18:51 Permalink

The systems across the world are slowly collapsing in their own little way.

I actually cannot Imagine what's going to happen once the population's fully awaken to the fact that it is not the government that holds the power. Nor is it in the hands of the few richest that funnel their wealth through the political system to influence government policy.

The power is within the people.

In reply to by DennisR

Implied Violins Xredsx Wed, 05/30/2018 - 20:26 Permalink

Well, the ones that don't starve to death first, I guess.  That seems to be the plan the elites have always had, and probably the easiest way to fulfill the Georgia Guidestones.  And the Global Warming bullshit might be enough to catch farmers off-guard once the Maunder Minimum kicks in.

Better get your preps in, guys.  Don't ever think we can't become Venezuela.  All it would take is to turn off the EBT's...

In reply to by Xredsx

Alok BankSurfyMan Wed, 05/30/2018 - 20:24 Permalink
  • "Concessions made to truckers will cost the Brazilian government 14.4b Real (US$3.85 Billion) throughout the remainder of 2018 "

 

this is a fiction... the psychopath CEO of Petrobras is closing the brazilian refinaries to import Diesel, gasoline etc from the US...  Brazil have all oil that it needs, but the diesel price is one of the biggest in the world, more then Haiti or Paraguay, that have to import all oil products that it need... to lower the diesel price won't cost much to Petrobras, but its CEO wants to preserve the profit of private investors...  that's a bad joke...

In reply to by BankSurfyMan

jmack Wed, 05/30/2018 - 18:30 Permalink

      I love how the brazilian socialist has no qualms about his socialist brothers holding the nation hostage to maintain their fuel subsidy when a conservative president tries to reform the system and put them back on a market structure.

 

      He will no doubt be blaming neoliberalism for the starvation and disease about to visit Brazil, when it is his great socialist revolution that is the cause.

I am Groot Wed, 05/30/2018 - 18:43 Permalink

People ask me why I prep. They think it could never happen here. They think i'm crazy to invest a few dollars every month. Everyone pays insurance of one form or another. Countries are falling like dominoes now.

Gotta go buy more ammo.........

RumpleShitzkin Wed, 05/30/2018 - 18:58 Permalink

Well, there goes China’s fuckin’ soy Cheerios.

No love from the Midwest, either.

All amber waves of corn and hay as far as the eye can see.

 

 because MAGA bitches