Brazil Economic Scan
In this edition: Brazil wont tap sovereign fund in 2009, Brazil to buy coffee @ 23% above market price, Petrobras bets on China bankroll, Ex-Sadia executives charged with insider trading, Brazilian stocks rally for 6th day.
Top headlines
Brazil won't tap sovereign fund in 2009
- Brazil will not tap a new sovereign wealth fund for key investment projects this year even though the economy may miss an official 2% growth forecast, Planning Minister Paulo Bernardo said.
- Bernardo acknowledged that Latin America's largest economy could fall short of the government's forecast for 2% growth in 2009. Still, he expected the economy keep growing and avoid some market predictions it could contract 0.3%.
- Until the 3rd quarter of last year Brazil had enjoyed sustained growth of more than 5% a year.
Brazil to Buy Coffee Up to 23% Above Market Prices
- Brazil, the world’s biggest coffee producer, will pay growers as much as 23 percent more than the current benchmark to help push up prices, Agriculture Minister Reinhold Stephanes said.
- Brazil will buy as many as 3 million bags of arabica coffee from November to March for 303 reais ($143) to 320 reais a bag. The average paid yesterday in the country’s South of Minas region was 261.17 reais, according to the University of Sao Paulo’s Cepea research agency. A bag weighs 60 kilograms, or 132 pounds. Brazil exported about 26.1 million bags last year.
- Arabica-coffee futures for July delivery rose $0.25, or +0.2%, to $1.249 a pound today on ICE Futures U.S. in New York.
Petrobras bets on China for bankroll
- Petrobras hopes to raise a loan from the China Development Bank, its chief executive said on Tuesday, to guarantee financing in 2010-2011 for an aggressive investment plan.
- Brazil signed an agreement on February 19 to supply China with 100,000 to 160,000 barrels of oil a day in what Petrobras expects to lead to $10 billion in financing to develop its huge subsalt oil fields.
- Petrobras announced earlier in 2009 that it would boost its five-year investment plan by 55% to a whopping $174 billion, when most oil majors were trimming capital spending to brace for falling demand amid the financial crisis.
Ex-Sadia Executives Charged With Insider Trading in Brazil
- Two former Sadia SA executives were charged with insider trading by Brazilian prosecutors for purchases of Perdigao SA shares before Sadia offered to buy the rival in 2006.
- The insider-trading charge is the first in Brazil since a law that designated the practice as a crime took effect in 2001.
- Sao Paulo-based Perdigao, Brazil’s biggest food processor, rejected a takeover bid by Sadia in July 2006 and surpassed the rival after taking over Eleva Alimentos SA in October 2007. Perdigao is currently in talks to merge with Concordia, Brazil- based Sadia, the country’s 2nd-biggest food company.
Brazil Stocks Rise for Sixth Day, Longest Rally Since January
- The Bovespa advanced +1.6%, to 51,499.48, the highest since Sept. 25. The index has gained 37% percent this year, bolstered by i-rate cuts and speculation of rising commodities demand from China.
- Brazil’s Gerdau, which gets more than 25% of its profit from North America, rose +4.7% to 18.85 reais. Companies in the U.S. cut an estimated 491,000 workers from payrolls in April, less than the 645,000 expected, indicating the worst of the recession’s job losses may have passed, a private report showed today.
- Vale, which ships about 29% of its ore to China, added +0.8% to 33.15 reais. Aracruz jumped +14% to 3.61 reais, Eletropaulo Metropolitana SA, the Brazilian unit of AES Corp., rose +7.7% to 30.20 reais, Banco do Brasil SA jumped +7.7% to 21.06 reais.
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