June 12, 2012
Due to a five-day-old sales strike by farmers, grain trucks entering Argentina's main port of Rosario slowed to a trickle on Monday (June 11), but exports remained uninterrupted due to ample dockside reserves.
The sales freeze, set to end at midnight on Tuesday (0300 GMT Wednesday) June 12, was called last week by growers angry about national government agricultural policies and a recent tax increase in No. one soy-and corn-producing province Buenos Aires.
Argentina is a top exporter of both crops at a time of increasing world demand. Only 881 trucks entered Rosario in the 24 hours through mid-morning on Monday, down from 3,800 on the same day last year, the Rosario grains exchange said on its website.
About 80% of Argentina's farm exports are shipped from terminals that line the Parana River at Rosario, offering quick access to the shipping lanes of the South Atlantic.
"There were stocks piled up at the grains terminals before the strike started. If the strike ends tomorrow, as we expect it to, there should be no slowdown in the export rate," said Patricia Bergero, an analyst at the Rosario grains exchange.
As angry as they are about profit-siphoning wheat and corn export curbs imposed by President Cristina Fernandez and the land tax hike, farmers were not expected to extend their action past Tuesday or repeat the huge, 2008 tax protests that paralysed the sector. Many growers are eager to get back to business because they need cash after a six-week dry spell in December and January cut into crop yields.
"Aside from the strike, we had a drought that reduced soy and corn production," Bergero added. "So anything that hinders the flow of grains to the market or to the ports is an issue to be watched."
The 2011-12 harvest, which is nearly collected, was also punished by May rainstorms that flooded parts of the Pampas grains belt, bogging down harvesting machines and forcing growers to leave some of their crops to rot. Supply concerns and signs that importers are switching from Argentine to US cargoes due in part to the sales freeze, helped lift soy and soymeal futures on the Chicago Board of Trade (CBOT) last week.
The strike arrived at a time of slowing economic growth in Argentina, which is being hit by fallout from Europe's financial woes and slackening demand from No. one trade partner Brazil.
So not only grains traders but the financial markets as well are going to be watching over the weeks ahead for growers' protests that might hit soy export tax revenue needed by the government as Fernandez tries to slow capital flight.
Fernandez, who has increased the state's role in the economy and needs to keep dollars in the country to repay public debt, said last week that she had decided to lead by example and swap her own dollar-denominated savings account for a fixed-term deposit in pesos.
