Argentina’s grain inspectors’ union, Urgara, said on the last day of 2020 that its members will continue to strike over the weekend after failing to strike a wage deal despite two meetings with the Chamber of Private and Commercial Ports (CPPC).
The strike comes after Argentina’s soy crushing companies signed a contract with oilseed workers’ unions on Tuesday night, ending a stoppage that delayed the loading of ships and stalled soy crushing since workers walked off the job on Dec. 9.
“Next Monday we will have a fresh meeting with the CPPC and we hope to be able to reach an agreement that meets the needs of the workers who stood by throughout the pandemic to safeguard foreign exchange income and the country’s economic growth,” said Urgara in a statement.
The union wants salary increases and an extraordinary bonus for its members having worked during the COVID-19 crisis. Argentina’s economy has suffered very high inflation over successive years, with the pandemic exacerbating the crisis.
The companies that make up the CPPC are the same international agro-export companies that reached the agreement on Tuesday with the oilseed workers’ unions.
Urgara’s strike has the most significant impact on Argentina’s southern ports, Bahía Blanca and Necochea, since companies operating out of the northern agro-port hub of Rosario – which handles 80% of Argentina’s agricultural products – tend to hire grain receivers who are not associated with Urgara.
Argentina is the world’s top exporter of soy meal and a major international soybean, wheat and corn suppliers.
In particulary, Argentina is the world’s third largest exporter of corn and up to the end of last month, 34.23 million tonnes (Mt) of corn from the 2019/20 season has been authorised for export, out of an exportable surplus of 38.50Mt.
Meanwhile, last Wednesday the country’s agriculture ministry blindsided global grain markets by announcing a suspension to export corn sales until the end of February, in an effort to safeguard domestic food supplies and quell inflationary pressures.
According to a government statement “this decision is based on the need to ensure the supply of grain for the sectors that use it as a raw material for the production of animal protein such as pork, chicken, eggs, milk and cattle, where corn represents a significant component of production costs.”
The government also said the measure was implemented to ensure that the remaining 4.27Mt was available for the domestic market over the summer months, especially since winter crop production was affected by the drought.
This is quite a drastic step for a government that is desperate for foreign currency, and the move is at odds with both corn industry and grower associations.
But how is the outlook for cereals for the 2020/21 Argentina?
The Bueno Aires Grain Exchange rated the soybean crop 42pc good-to-excellent against 55pc last year.
Even more alarming was the early planted corn crop rating of just 17pc good-to-excellent, against 35pc a year ago.
The bottom line here is the moisture stress area is expanding rapidly and already covers about half of Argentina’s soybean and corn crops.
This is likely to grow given the drier than average forecast for the balance of January.
The dryness and heat have limited new crop corn seeding progress to just 75pc of the intended area, and if the weather in Argentina refuses to cooperate the world has itself a growing row crop supply dilemma.
So, in 2020/21 wheat production is forecast at 17.4 million tons, 8 percent lower than expected due to weather losses, reducing exports to 11.2 million tons.
Corn production in 2020/2021 is projected at 48 million tons, 2 million tons below Experts Ag forecasted , on expected lower yields.
Strong demand triggers an 8 percent increase in sorghum production in 2020/2021.
In fact, sorghum production in 2020/2021 expected at 2.6 million tons weather permitting .
China’s ongoing demand for sorghum has raised local prices, encouraging additional planted acreage.
Sorghum planted area increase by 75,000 hectares from last year.
In this context, multinational grain exporters are already worried that Argentina’s Peronist government could extend their old crop export sales ban to new crop corn and soybean products should the current drought worsen or spread over the next two months.
In addiction, the export ban is also likely to discourage farmers from completing the remaining corn and soybean seeding program amid declining domestic corn values and inadequate soil moisture.
In the meantime, shipments continuing stand by.
Loading of more than 140 agricultural export ships in Argentina had been stalled by a port-side oilseed workers’ strike that started on Dec. 9.
The CIARA-CEC chamber of soy by product manufacturers had meet with the two main unions representing oilseed workers to try and hammer out a 2021 compensation package and the Argentine government, sponsored talks.
The negotiations overseen by the Labor Ministry, have seen CIARA-CEC offer a 25% raise to come in three phases through August but workers want a one-shot 25% increase through August.
Argentine inflation was 35.8% in the 12 months through November, according to official data so, is also at issue is a bonus to be paid as compensation for working through the COVID-19 crisis.
CIARA-CEC has offered a 70,000 peso (about $840) bonus while the unions say they need a one-off.
So, even if grain markets farewelled 2020 with fireworks across the board, the new year as we can see since this first days, will not remain back certainly.
Yestarday, soybeans closed above US$13,515 per bushel and going for US$ 14; corn posted its longest-ever rally closing US$4,30 and wheat climbed to a six-year high closing to US$6,5325.
The strikes in Argentina have certainly influenced bean values over the past couple of weeks, but it is the prospect of strong demand in 2021, particularly from China, that has been the focus.
There is zero room for weather issues in any of the major producers, so the prospect of lower production out of Argentina due to the ongoing drought and less than ideal finishing weather in Brazil has global consumers concerned.
For this, the corn market has all it could hope for at the moment: strong demand, weather hit supply and political intervention.
If we add the realisation that China may have reached a level of corn demand where they are no longer self-sufficient, and the global balance sheet gets tighter by the day, we can only image where it will stop.
And while the planting of US summer crops is still months away, the race for acres is heating up.
A tightening global soybean balance sheet and the lowest US ending stocks in seven years is telling growers to plant more beans.
But the prospect of growing import demand from China and production issues in Latin America creates a compelling argument to increase corn plantings.
No doubt soybeans will stand tall if corn wants to buy acres at their expense.
