Argentine port strike worries Brazil's wheat millers: trade group

[SAO PAULO] The prolongation of a workers' strike in the ports of Argentina may disrupt wheat millers' operations in Brazil, especially if the labor action is not called off before the end of the year, industry representatives told Reuters.

More than one hundred cargo ships are facing delays to load agricultural products in Argentina, including wheat that Brazil imports to produce flour and by-products.

Government data disclosed on Monday showed incoming wheat volumes as dropping, a sign that the Argentine strike is taking a toll on imports. On an annual comparison, the average of Brazilian wheat and rye imports fell by half through the third week of December, to just over 14,000 tonnes per day, government data showed.

Brazil just finished harvesting its own wheat crop, estimated at 6.3 million tonnes. For a short time, internal demand will fall as millers halt factories during the holidays.

"At this time of the year few buy wheat," Rubens Barbosa, president of wheat millers association Abratrigo, said by telephone on Monday. "But if the strike doesn't end, some will face limited supplies." Barbosa said he is in contact with Brazil's embassy in Buenos Aires to monitor the situation.

Brazil imported 4.3 million tonnes from Argentina in the year through November. US and Russian traded volume rose by 92 per cent and 159 per cent in the period, a sign Brazil is accessing alternative suppliers.

Still, with vessels stranded in neighboring Argentina and unable to load, the situation is "dramatic," a wheat miller said, requesting anonymity.

Jonathan Pinheiro, an analyst with agribusiness consultancy Safras & Mercado, said Brazil's internal supplies face risks if the strike continues in January.

A fall in Argentine imports would lead to a rise in costs for millers, which would need to resort to potentially less- competitive producers, Mr Pinheiro said.

REUTERS