Grain markets face turmoil as Argentine strike looms

June 14, 2013 at 9:14 AM
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BUENOS AIRES, June 14 (UPI) -- International markets for corn, soybeans and other grains face turmoil as Argentine farmers announced they'll go ahead with port stoppages starting Saturday.

Farmers' representatives blame the government of President Cristina Fernandez de Kirchner for a stalemate in talks on agricultural policy reforms. The farmers are unhappy with a taxation regime Fernandez introduced after winning re-election in 2011. They're furious with what they denounced as convoluted regulation that has unloaded a burden of bureaucracy on the country's agriculture sector.

Argentina is the world's second largest corn exporter and No. 3 soybean exporter and this year in particular has been profiting from a downturn in U.S. yields. Traders said the Argentine farmers' action was certain to push up global prices for commodities. Wheat and other grains exported by Argentina are also likely to be affected.

The farmers say they'll suspend grain sales to waiting ships for a five-day period from dawn Saturday to Wednesday midnight. The stoppage means about 150 ships already docked at Argentine ports will end up paying additional moorage costs running into millions of dollars.

Most traders will be keen to pass on the costs, resulting in a global price distortion, Argentine agriculture industry analysts said.

Argentine officials had no immediate comment on the gathering crisis.

Analysts said the Fernandez administration would likely seek a temporary compromise. Farmers complain government departments seldom keep promises.

Until recently Argentine farmers sounded happy and upbeat some of their produce would be filling a gap in U.S. grain exports, caused by last year's drought that damaged yields in the United States.

Grain prices already were seen to be rising this week as traders sought to buy more grain in anticipation of the Argentine stoppage. Agriculture industry sources said traders were trying to minimize moorage costs by purchasing extra quantities. Most shippers would prefer to sail away rather than get caught up in the strike and incur additional costs at Argentine ports while waiting for the dispute to be resolved.

Despite numerous promises Fernandez hasn't addressed grievances of the agriculture sector, farmers' representatives say. The president faced a concerted revolt in the sector in her previous term in office. Farmers' strikes, riots and stoppages went on for four months in 2008 and then frequently throughout subsequent years.

Fernandez blames her foes for aggravating the dispute, a charge the farmers' representatives deny.

The farmers' strike is ill-timed for Fernandez who has been resorting to various measures to build up the country's dollar reserves and to fend off a major trade deficit. An earlier government campaign offering amnesty to Argentines holding U.S. dollars in the country or foreign accounts garnered a lukewarm response.

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