What goes up along with fuel prices, fertilizer crisis and what matters in the market

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What goes up with the fuels

Interest, prices of plane tickets, travel by app, and the cost of practically everything that is transported by truck in Brazil. All this and a little more has already increased or should increase with the readjustment of fuels and cooking gas announced by Petrobras last Thursday.

Understand: The state-owned company’s decision came in the face of pressure from shareholders for readjustments and the fear of shortages expressed by company members and politicians in the Northeast.

Fees: also pressured by the February inflation announcement, the short-term DI (Interbank Deposits) rate –for January 2023– ended Friday (11) in 13.2% per year. A rise of 0.29 percentage point from the close of Wednesday (9).

In floor: Uber announced that it will raise the prices of trips starting this week in 6.5%, on a temporary basis, and also promised a package of R$ 100 million. The 99 said it will increase in 5% the km run in the driver’s gain.

Up in the air: aviation kerosene also increased with the soaring of international oil prices, and therefore Gol, Latam and Azul are preparing an increase in the value of air tickets for this month of March.

More about Petrobras mega-increase:

A semester with double-digit inflation

Brazil has been experiencing consumer inflation for a semester above 10%. In February, the IPCA rose by 1.01%reaching 10.54% in the sum of 12 months, informed the IBGE on Friday (11).

The result came above the market forecast, which expected a high of 0.95%.

In numbers: the rise in February was driven by the education segment, with a variation of 5.61% and impact of 0.31 pp (percentage point). The month is marked by the readjustment of school fees.

All nine groups surveyed registered price increases, with emphasis on food and beverages, with a rise in 1.28% and impact of 0.27 pp

what explains: the beginning of the year was marked by losses in the field caused by adverse weather conditions. In the South, there was drought, in the Southeast, excessive rainfall. Phenomena like these have become more frequent and intense with climate change.

What went up the most: field losses have reached supermarket shelves. Highlight for the surge in foods such as potato (23.49%) and carrot (55.41%) just last month.

It should get worse: the mega-increase in Petrobras and the impacts of the war on commodity prices are expected to put pressure on inflation from March onwards and have made analysts raise their estimates for the IPCA in 2022.

Prices of food and feed raw materials could rise between 8% and 20% around the world because of the conflict in Ukraine, warned the FAO, the UN food and agriculture agency.

Will the dollar continue to fall?

The real should continue to appreciate in the coming weeks with the economic impacts generated by the war in Ukraine. This is the analysis of fund managers interviewed by the sheet.

What explains: the appreciation of energy, agricultural and metallic commodities combined with an increasingly aggressive cycle of high interest rates to curb the advance of inflation increase the attractiveness of the Brazilian market for foreigners.

• The Brazilian stock exchange has a strong presence of companies linked to basic materials and also of banks, which see their profitability grow with the rise in the Selic.
• Foreigners can also earn money by borrowing from low-interest countries and financing companies or the Brazilian government at more attractive rates.
• As there are more people selling dollars to buy reais, the price of the American currency in the country falls.

In numbers: the foreigners entered with BRL 67.5 billion on the Brazilian stock market this year until March 2, according to B3 data. In the whole of 2021, the balance was BRL 102.3 billion.

More about the Scholarship:

The rise in fuel prices and the increase in inflation hit different sectors, such as retail and aviation, but a portfolio with uncorrelated assets just needs calibration, without major changes, says columnist Marcos de Vasconcellos.

Expensive and hard to find fertilizer

It is difficult (and very expensive) for Brazilian producers to buy fertilizer. Input prices had already skyrocketed with the logistical nodes caused by the pandemic, and the Russian invasion of Ukraine further damaged the supply of fertilizer in Brazil.

what explains: the country matters 85% of the fertilizers it consumes and depends on 95% of potassium that comes from outside. Russia and Belarus (which supports the regime of Vladimir Putin) account for more than a third of fertilizers used in Brazil.

In numbers: the import price of MAP, a phosphate widely used in Brazil, rose by 35% between February 10th and March 10th. Urea had an average increase of 50%. The data are from Argus, one of the largest pricing agencies in the world.

why it matters: according to Anda (National Association for the Diffusion of Fertilizers), companies have stocks for three months of sales, which would guarantee the off-season corn.

But for the planting of essential items for the second half of the year for Brazilian agriculture, such as soybeans, rice, beans and part of the corn, the supply of the input is risky. Soybean, corn and sugarcane crops consume 72% of fertilizers used in the country.

Looking to the future: while seeking to guarantee supply in the short term, the government launched on Friday the National Fertilizer Plan, which aims to reduce the weight of imports from the current 85% to around 60% in 30 years.

To achieve this goal, the government plans changes in the regulatory and tax framework, as well as the granting of subsidies and public funding.

More about agro:

Climate change in Brazil could turn coffee and oranges into luxury products.