Critical Time for Farm Strike in Argentina

Government softens stance; presidential action uncertain.

Published on: Jun 2, 2008

This week will be a critical time for talks between the farm leaders and government on the Argentine farm labor strife. Several strikes have occurred over the past few months as negotiations have been tenuous. The issue at the center of the controversy is a sliding-scale for export taxes on soybeans.

According to market analyst Arlan Suderman recent polls have shown the confidence of the public in the government and their ability to handle the situation is dropping dramatically. Suderman says traders will be watching how the fairly new administration of Argentine President Cristina Fernandez de Kirchner responds to the loss of public opinion. She may take more of a hard-nosed approach with the farmers or she could soften the tone and give in to the farmers.

"In a move maybe indicative of which direction the new administration will go, they did take steps late Thursday to ease back, just a bit, the export tariffs that are so critical," Suderman says. "They scaled the higher end back a little bit. Farm leaders said it was not enough; need to simply do away with them. With the farm leaders rejecting the offer no easing of the tension, but it may give us a glimpse that the government may be crying uncle."

The United States continues to have solid export demand for soybeans because of the uncertainty. There were several rumors last week of as many as 15 cargos of soybeans that had been shifted from Argentina to the U.S. Also, China has been aggressively buying in new-crop soybeans. Suderman says the situation in Argentina will be under close watch from traders around the globe.

"Argentina has some tremendous farm ground and they really have the potential to be a significant producer of soybeans as well as other crops," Suderman says. "The Argentine government in trying to manage it, is really taking them out of the picture as far as being a major world competitor."