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UPDATE 2-Argentine grain farmers call national sales freeze
June 5, 2012 / 8:12 PM / 5 years ago

UPDATE 2-Argentine grain farmers call national sales freeze

 * Halt of farm product sales to start on Wednesday
 * One-week strike to protest Buenos Aires tax hike
 * Move follows four-day strike in Buenos Aires province

 (Adds market context, background)	
 By Hugh Bronstein	
 BUENOS AIRES, June 5 (Reuters) - Argentine farmers announced
a one-week nationwide halt to grain sales o n T uesday to protest
higher taxes in key farming province Buenos Aires, a move that
lifted U.S. soy futures as traders braced for tight supplies.	
 Already upset about the national government's policy of
wheat and corn export curbs that hurt profits, growers say the
tax increase will force some of them to sell their fields.	
 The South American country is the world's No. 3 soybean
exporter and No. 2 corn supplier after the United States. 	
 "Something is going very wrong in Argentina's farms, which
is why we're sending this wake-up call," Eduardo Buzzi, head of
the Argentine Agrarian Federation, told reporters.	
 "We're in bad shape and things are getting worse," he said.	
 Grains and financial markets will watch over the days ahead
for signs that the strike, to start o n W ednesday, might
intensify to resemble the massive farm protests that paralyzed
the sector and rocked Argentina's government four years ago.	
 Buenos Aires growers began a limited strike on Saturday over
the tax hike. Expectations that the protest would expand from
that province to the rest of Argentina helped lift soybean 
and soymeal futures on the Chicago Board of Trade while
underpinning corn, U.S. traders said.	
 "Strangely, it seems to be affecting corn shipments more
than soybeans, with delays already noted on ship loadings," ABN
AMRO analyst Charlie Sernatinger said.	
  The sales strike comes as Argentine farmers move into the
final stages of soy and corn collection for the 2011/12 crop
year.	
 Thanks to its fertile Pampas farm belt, bigger than France,
Argentina is the world's top exporter of soyoil, used for
cooking and in the booming biofuels sector.	
 It also ranks No. 1 in soymeal, used as animal feed at a
time of increased demand from China, where the emerging middle
class has discovered a taste for beef steak.	
                	
  	
 Harvest estimates for the 2011/12 crop year have been cut 
due to extreme weather swings, starting with a December-January
drought that parched fields at the height of the Southern 
Hemisphere summer and ending with the heaviest May rains in a
century, which flooded those same fields.	
 Buenos Aires Governor Daniel Scioli needs more tax revenue
to help shore up provincial finances ahead of a possible 2015
presidential run. He is seen by Wall Street as the best hope for
a market-friendly leader to succeed President Cristina Fernandez
at the end of her second term.	
 Scioli says he would run if Fernandez, who has increased the
state's role in the economy, does not seek a change in the
constitution to allow her to go for a third term.	
 Scioli says the tax hike is structured "progressively",
exempting 62 percent of the province's farms and granting
exemptions for growers in the remaining 38 percent who were hit
hard by drought and flooding during the 2011/12 season.	
 	
 WHAT'S NEXT?	
 Fernandez's government was rocked by farm protests over her
tax policies in 2008. Tempers have calmed since then as high
international soy prices have brought some relief to growers.	
 But unhappiness remains about Argentina's double-digit
inflation and policies such as foreign-exchange and import
controls that have hurt business confidence. Economic growth is
slowing, meanwhile, under the weight of Europe's financial
troubles and slackening demand from No. 1 trade partner Brazil.	
 "What we are seeing now is a protest similar to that which
we saw in 2008, but much less strong," agricultural economist
Manuel Alvarado Ledesma said.	
 "That is not to say it will not strengthen over the weeks
ahead because there is a lot of discontent in the countryside
over government export and foreign-exchange policies," he added.	
 Argentina's Agriculture Ministry expects soy output of 41.5
million tonnes this season after the dry spell dashed
early-season hopes of a bumper crop. Corn production is seen by
the ministry at 20.1 million tonnes, way under the record 30
million tonnes originally forecast. 	
 Export companies with operations in Argentina include
Cargill, Bunge and Noble.	
	
 (Additional reporting by Juliana Castilla, Maximilian Heath and
Nicolas Misculin in Buenos Aires and Julie Ingwersen in Chicago;
Editing by Dale Hudson)	
 

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