From: Widjaja, Fordyanto (Research) [mailto:[EMAIL PROTECTED]
Sent: Thursday, March 27, 2008 10:06 AM
To: undisclosed-recipients
Subject: CPO price is now back to its all time high at USD1,400/ton
We observe interesting development in the global edible market, which would
be positive for CPO plays in the region
What is happening: Argentine farmers' strike against the government's
export tax increase for soybean, wheat and beef would continue "indefinitely."
The Argentine government raised soybean export tax from 35% to 45% on March 11,
2008; and farmers felt they are being "robbed" by the government. In the past
14 days, farmers have been staging a strike and blocking the streets,
disrupting the flow of soybean, soybean meal and soybean oil supplies to the
crushing plants and seaports for exports.
Impact: Soybean supply disruption in the world's market - Argentina accounted
for 59% of world's exports of soybean oil and 49% of soybean meal in 2007.
This condition would be positive for CPO given uncertain supply security coming
from the soybean producers, in addition to substitution effect amid cheaper
price of CPO against soybean oil.
The latest price index in Rotterdam shows that the CPO price is now back to
its all time high at USD1,400/ton and we believe this condition would likely
persist in the short-term until supply condition in the soybean market
improves.
By BILL CORMIER, Associated Press Writer Wed Mar 26, 12:46 AM ET
BUENOS AIRES, Argentina - President Cristina Fernandez refused to ease tax
hikes on agricultural exports Tuesday, facing down angry farmers embroiled in a
nationwide strike that has all but halted production in one of the world's
biggest beef [and soybeans] exporting nations.
At least 9,000 cattle normally enter this capital's sprawling stockyard each
day for slaughter, yet not a single animal arrived this week due to the farm
and ranch strike, the largest in decades.
South America's second-largest economy a leading exporter of soybeans, beef
and wheat is in full farmbelt rebellion over a new sliding-scale increase in
export taxes. Soybean taxes are being hiked from 35 percent to 45 percent, with
smaller increases on corn and other farm products.
Scattered shops began emptying of beef, milk, chicken and cooking oil Tuesday
as farmworkers mounted the most serious challenge yet to Fernandez's fledgling
government.
"Bad policies by the government are leaving people without food, without
beef," complained Mario Llambias, one of the farm protest organizers who
announced Tuesday a 13-day old strike would now continue "indefinitely."
But Fernandez appeared undeterred as she delivered a televised address later
in the evening. Vowing not to "give in to extortion," the new president
declared that her government will not grant any concessions to the striking
farm and ranch workers.
Fernandez said farm producers have profited from a boom in commodity prices
and it is only fair to tax them more to redistribute wealth to poorer parts of
society. "This seems like ... comedy," she said.
Late Tuesday, thousands of angry middle-class residents of Buenos Aires and
other cities responded to her speech by banging pots in a raucous, spontaneous
outpouring of support for the farmworkers. Strikers lit tires on fire after
nightfall on blockaded roads and vowed to stiffen their protests.
" Argentina ! Argentina !" some 5,000 people, including mothers with
strollers and others banging on pots joined a surging and unexpectedly strong
challenge to the government.
Other protesters in farm-dependent cities and hamlets across Argentina 's
farmbelt waged similar pot-banging protests.
"This is a pretty ugly wakeup alarm for the government after just a few
months in power," said one angry protester Hector Bernardino, among the 5,000
who thronged the main Plaza de Mayo in Buenos Aires .
He said middle class Argentines, like the farmers, are weary of taxes and
double-digit inflation he said the government has sought to conceal behind
praise for years of robust recovery.
After a searing 2002 economic meltdown, the government replenished its
coffers through taxes on surging grain exports and soaring commodity prices.
The cash influx powered an economic growth rates topping 8 percent annually.
Argentina's economy is back on track and agriculture remains one of its
most profitable sectors. It's only fair that farmers and ranchers be taxed on
more of that wealth, according to Economy Minister Martin Lousteau, who
announced the controversial tax overhaul on March 11.
Growing demand for foodstuffs in China and other teeming nations, high oil
prices and other shifts in the global economy have all helped pushed grain
prices to new highs in recent months.
But the agriculture industry is howling at having to pay more.
The farmers are demanding to sit down and negotiate a rollback on the new
taxes, which Buzzi calls "extortion" against farmers. The government says it
won't start talks until the protests stop.
And so the daily demonstrations have continued, with belching tractors and
giant harvesters blocking rural highways nationwide, occasionally sowing
monstrous traffic jams.
During the long Easter holiday weekend on routes from the capital to South
Atlantic beaches, many Argentines stuck in the traffic applauded the
demonstrators, saying they too are fed up with government taxes.
The protests have spread far beyond the capital, with sugarcane workers
beating cane stalks along highways in north-central Tucuman province and
soybean farmers dumping mounds of beans near the border with Uruguay .
Police have managed to keep the most important routes open without widescale
arrests or violence. But the confrontations have been tense.
And now Argentina 's consumers are beginning to feel the pinch.
In the country's main stockyard Tuesday, the Liniers market, a lone cowhand
galloped on his horse past empty cattle pens where thousands of cattle usually
jostle.
One supermarket group warned of dwindling wheat, rice and pasta supplies in
the western city of Mendoza . In eastern Rosario , cooking oil shortages were
reported.
"I don't even have chicken left," said one idled butcher, Alfredo Estefano.
"We haven't seen a strike like this in 20 years."
Regards,
Fordyanto Widjaja, Vice President
Morgan Stanley | Research
23 Church Street | #16-01 Capital Square | Floor 16
Singapore, 049481
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