cattle numbers plummet in argentina, page-2

YC

Good find, and it totally supports your contention that AAC is facing lessened competition from Argentina. While it seems, at least for the time being, that Brazil has broken out of the vicous economic cycles that have plagued South American countries for decades, Argentina may be reverting to form.

However of more strategic concern is the worldwide effects of Bonzai Bush's biofuels policy. Maybe good shortterm politics - boosts Republican support in the US farming states and allows the American public to delay making real decisions about energy - but it is really contorting agricultrual markets around the world (food riots in Mexico [corn], food strike in Italy [wheat], Malaysian government releasing palm oil from reserves [palm oil] etc etc. It is just as likely that when the US modifies its biofuel policy - and the evidence is that most biofuels actually use up more energy in their production than they release - then there will be a massive restructuring in the farming industry throughout the world.

In any case I suspect it is likely that increased grain prices are causing just as much tension and readjustment in the Australian agricultural industries as in those in Argentinia (our advantage is our pollies are not as loopy as theirs).

From what I understand from your previous postings, you see the fundamental driver of the coming long-term soft commodities boom to be the changing diets of people in the BRIC economies as they become more affluent. If that is right, then I support your "stronger for longer" view of the soft commodities boom. However I think the US biofuels policy is a dangerous one for soft commodity investors which complicates matters greatly.