Nearly a year ago farmers in Argentina began a series of strikes protesting a sliding-scale tax on the export of soybeans that had been implemented by Argentina's president. The strikes and roadblocks led to statute being sent to the legislature for ratification, however on a very close vote it was defeated. The tax reverted back to the old law, but that tax rate of 35% on exports is still extremely high and has caused a lot of tension between the farm leaders and the government as they have attempted to negotiate.
The strikes have continued in an on-again off-again basis. Last Friday after the government agreed to meet with farm leaders Tuesday but said they would not talk about the export tax, leading to the strike being back on-again. Farm Futures market analyst Arlan Suderman says the strike will continue at least through Tuesday's meeting after which it will be decided whether it will continue or not.
"The government says the export taxes are not on the table to discuss and the farmers are saying they have to be on the table, so a very continuous situation," Suderman said. "The Argentine government depends heavily on those taxes to fund their social programs."
Suderman says that Argentina has some drastic financial problems. Last week bond prices tumbled on concerns about the Argentine economy and its financial system and its ability to make payments and balance the budget. Suderman says the situation in Argentina may be helping U.S. soybean exports.
"A lot of instability in Argentina could be contributing to the increase in exports that we are seeing," said Suderman. "A reluctance maybe to do business with Argentina is the speculation."