Argentine Dock Workers Strike, Crop Estimates Hit Global Grain Prices

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Researched by Industrial Info Resources (Sugar Land, Texas)--Strikes by the Union of United Maritime Workers last week caused grain prices to jump to a six-month high in the soy market, as prices increased 1% to $13.52 per bushel. Another factor was a report that the U.S. Department of Agriculture cut its estimates of drought-withered South American soybean crops more than expected. Brazilian soy was cut 5%, and Argentine soy was cut 3%.

Drought in South America reduced the soybean crop in Brazil, the world's No. 1 exporter, by 9% in three months, and the crop in Argentina by 11% during the same time period. The U.S. government said on Friday that cuts were larger than traders had expected.

The Union of United Maritime Workers went back to work at the end of last week, but union talks could break down again. The price spike last week was caused by more than 150 grain-laden vessels sitting idle outside Argentina's ports and along the Uruguayan coast. Dock workers who moor ships in Argentine harbors walked off the job on Thursday, March 4, for an indefinite strike over what they called inadequate staffing of work shifts. This left dozens of vessels paralyzed along the Parana River near Rosario, one of the world's biggest grain export centers.

"Argentina is prone to labor disruptions, and maybe tomorrow they will go on strike again," said Belen Aguirre, a researcher from Industrial Info's Latino American office in Cordoba, Argentina. Hefty wage demands are traditionally negotiated in March and April, and have become common as annual inflation is reported by private economists at more than 20% per year.

Argentina is a top world supplier of soy and corn, and the country's farm sector is key to the government's fiscal health, so strikes affect the country's export industry, which its citizens rely upon heavily.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.