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Argentine Strike Pushes Up Prices of Beef

12 December 2006

ARGENTINA - Argentina's inflation-linked peso bonds rose for a ninth straight day on expectations a farmers' work stoppage will push up the price of beef, the country's main food staple.

Farmers, who are upset over government efforts to place restrictions on the industry, are concluding today a nine-day work stoppage that has reduced the supply of cattle to the country's biggest livestock market in Buenos Aires by about two- thirds. The drop in supply may drive up the price of beef, the country's main food staple, and lead to a pickup in inflation.

``There is a huge reduction in cattle entering the market as a result of the strike,'' said Javier Salvucci, head of research at Buenos Aires-based Silver Clouds Advisors, which provides economic and financial consulting. ``Prices in December will feel the impact of this very large strike.''

The yield on the government's benchmark 5.83 percent peso- denominated, inflation-linked bond due in 2033 fell 5 basis points, or 0.05 percentage point, to 5.76 percent at 3:30 p.m. New York time, according to Banco Mariva in Buenos Aires. The yield has fallen from 6.47 percent at the end of October. The principal on the bonds moves in line with consumer prices.

A jump in beef prices can push up Argentina's inflation rate because meat has a 4.5 percent weighting in the country's main consumer price index, seven times the 0.64 percent weighting in the main United States consumer price index.

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Source: Bloomberg.com


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