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 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.
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