Argentine Government Continue to Tango with Farmers- Viva the Strike

Implications: The Argentine farmer strike continue. It has been 100 days with on and off again strikes, with truckers and housewives joining the protests. Exports as well as domestic agricultural processing has been stopped again, putting additional pressure on soybeans in the US and the Argentine Government.

Analysis: For those who are counting, Argentine farmers have just declared their fourth strike in the past 3 months to protest the increase in export taxes on unprocessed agricultural products (soybeans, wheat , sunflower seed and corn). This follows the arrest of some protesters on June 15th and the end of the last strike last week. The President Cristina Fernandez de Kirchner continues to lose popularity and the bets are on as to when the economy will suffer its next major collapse.

Argentina is a leading exporter of grains, oilseeds, vegetable oils, soybean meal and beef. These strikes have disrupted all of these exports as well as the supply to the markets in Buenos Aires. Millions of gallons of milk have been dumped as they could not reach their markets. Housewives in Buenos Aires have been supporting the farmers banging their empty pots and pans.

All of the major international grain companies have investments in Argentina. Many are exporters and processors in Argentina, such as ADM, Cargill, Bunge and Louis Dreyfus Company, while others such as Corn Products International only process domestic grains. For the first quarter of this year these companies did not report any major financial losses from these strikes, but 2 12/ months have gone by with more strike days then not.

The continued disruption of exports will cost Argentina and its farmers in the future, as it is seen as a less dependable supplier and will be discounted in the word markets. In the meantime, US and Brazilian soybean exports will be stretched to the maximum until Argentina establishes some normality.