January 18, 2011

 

Argentine farmers freeze grain sales due to export curbs

 

 

Argentina's farmers stopped the sales of wheat, corn and soy on Monday (Jan 17) as they went on strike over export limits, rekindling a dispute that pushed global grains prices to record highs three years ago.

 

The seven-day protest by growers in the South American nation, one of the world's biggest food providers, could fuel supply concerns just as dry weather linked to the La Nina weather pattern worsens the outlook for soy and corn production.

 

Highways near the main grains hub of Rosario were unusually free of trucks on Monday (Jan 17) morning after a busy weekend of hauling grains to crushing plants ahead of the strike, which was not expected to disrupt exports.

 

Argentine farmers have been at odds with the government for years over export curbs aimed at taming double-digit inflation and guaranteeing affordable supplies of everyday staples.

 

They say a system of wheat and corn export quotas lets millers and exporters pay farmers low prices, and they demand that centre-left President Cristina Fernandez scrap the caps so they can enjoy high wheat prices as they harvest a bumper crop.

 

"We must improve and normalise grains trade in Argentina, especially for wheat and corn. Farmers lose fortunes and consumers have to pay more for their daily bread," said Eduardo Buzzi, head of the Argentine Agrarian Federation, one of the four farm groups leading the strike.

 

Buzzi said government policies only serve to benefit multinational companies such as Cargill and Louis Dreyfus.

 

The farmers' broad demands may be difficult for the government to meet, meaning more protests could follow.

 

This week's strike, which will last until midnight on Sunday (Jan 16), is bad news for Fernandez, just nine months before her widely expected bid for re-election.

 

The wave of farmer strikes that began in March 2008 over a tax increase on soy exports battered her popularity, hit Argentine asset prices and disrupted grains shipments at the height of the soy harvest.

 

The latest protest is not expected to rouse the same public interest or support as in 2008, and the impact on grain prices will likely be muted because soy and corn harvesting has not yet begun.

 

Buzzi said farmers would not set up roadblocks as they did sporadically in 2008, sparking shortages of food and fuel, adding that the strike was largely symbolic.

 

In Rosario-area ports, trade is generally light at this time of year and soy crushers and exporters increased purchases last week to build up stocks in anticipation of the strike.

 

The Rosario grains market will be open this week but traders said they will stay away to show support for farmers.

 

CBOT traders will likely be more concerned about the impact of parched conditions on Argentina's soy and corn crops than on the farmers' strike, although rains over the weekend brought relief to some areas.

 

Crop analysts have started to slash production forecasts for the grains – to as little as 40 million tonnes in the case of soy from initial estimates for about 52 million tonnes.