"About 30 minutes before she finished her speech, the undersecretary of planning and the state representative on the (YPF) board, Roberto Baratta, marched in and said the business relationship was ended," Jiminez recalled after a luncheon in New York this week.

"All they said was 'We need the office', and that was that. We had 10 minutes to get our stuff and get out. Our e-mails and phones were cut off within 15 minutes of their arrival. It was a shock. Simply, that the relationship was finished. I never thought this would happen," said Jiminez.

In February 2012, Argentine officials accused the oil company of denying them entry to a board meeting. It was the early days of the pressure  being applied to the company, and the local energy industry in general, by the Fernandez government to boost oil and natural gas output as fuel imports were soaring.

"We began to hear rumors last February that something like the expropriation might happen. We had 15,000 workers at YPF out of a total of 28,000 for Repsol overall," said Arturo Gonzalo, corporate director of institutional relations and corporate responsibility. Gonzalo spoke during a luncheon sponsored by the Hudson Institute, a conservative think tank in New York.

In his remarks during the luncheon Gonzalo said the company was not engaged in any negotiations whatsoever with the Argentine government, although Repsol is willing to do so.

"Argentina is no longer a country where rule of law can be counted on ," Gonzalo said, referring to the Fernandez administration. "They don't talk and they don't pay."

Until February of last year, YPF had good relations with Fernandez, Gonzalo said. However, the leader of Latin America's No. 3 economy and a member of the Group of 20 nations has taken on increasingly interventionist and off-beat policies, which infuriates her critics. She had praised the company when they found the equivalent of 22 billion barrels of oil in the form of massive shale oil and natural gas.

In 2008 she stunned investors when she nationalized private pension funds at the height of the global financial crisis. The International Monetary Fund is expected later this month to discuss Argentina's progress in improving the quality of its economic data. Since 2007, Argentina has been accused of under-reporting inflation and exaggerating economic growth and industrial output figures, partly for political gain and also to reduce payments on its inflation-indexed debt that was created in the aftermath of its historic sovereign debt default in 2002.

But Fernandez has been strident with investors who refused to go along with her policies. Case in point is the fact that more than a decade after defaulting on its sovereign debt, the country refuses to submit to U.S. court rulings in favor of investors wanting full payment on their investment. The government's steadfast refusal to pay has essentially cut it off from international financial markets and hindered its ability to sell debt.

Jiminez remarked that he had worked closely with Baratta over the eight years he was in Argentina. Baratta asked him to stay on an extra day to help the transition. "I felt physically and mentally unsafe in the country," he said.

BANGALORE/LONDON, Feb 8 (Reuters) - Dry cargo shippers with smaller vessels are shifting to more-risk, more-reward spot markets, eyeing rising demand for sugar and grains -- commodities well suited to versatile supramax and handysize ships.

Ship owners generally prefer long-term charters in a weak market. The Baltic Dry Index <.BADI> o-year lows in recent weeks but confidence has been rocked by South Korean dry bulk group Korea Line Corp <005880.KS> filing for bankruptcy protection, highlighting the risk of charter-party defaults.

"Concerns now persist industry-wide, as speculation grows as to whether faults," Deutsche Bank analyst Justin Yagerman said.

"Continued charterer defaults could bring into question many companies' above-market charters." Flooding in Australia, the world's biggest coal exporter, and weather-srupted coal shipments and dented sentiment for capesize vessels -- the giants of seaborne trade routes, typically hauling 150,000 tonne cargoes such as iron ore and coal.

Demand for grains, though, has soared. Wheat prices in the European Union, the world's No.2 exporter, a year, aided by a Russian export ban due to drought and strong demand from North Africa and Middle East countries.

Global food prices, which hit their highest level on record last month, is a mounting worry for world leaders. Recent catastrophic weather around the globe could put yet more pressure on the cost of food, an issue that has already helped spark protests across the Middle East. Egypt is the world's biggest wheat importer.

Eagle Bulk Shipping , which operates supramax vessels that typically have around half the capacity of a capesize, lowing them to haul a wider range of cargoes, has placed half its ships in the spot market.

That strategy has been welcomed by investors, and Eagle Bulk Shipping's price-to-earnings ratio of almost 35 is the highest among its peers, Thomson Reuters StarMine data shows.

"We prefer smaller vessels due to the more favorable supply dynamics, more diverse cargo loading options, record spot fixture activity for the last five months due to a recovering worldwide economy, and the increasing ton-mile in the grain trade," FBR analyst Doug Garber said in a note.

Genco Shipping and Trading could be another to gain from a near-term rebound in day rates -- the cost of renting a ship by the day -- as it has roughly half its 2011 days in open or linked-to-index charters.

Conversely, Diana Shipping , DryShips , Navios Maritime Partners LP and others whose fleets are dominated by bigger ships, have placed more vessels in long-term contracts, hoping for steady returns. Diana and DryShips trade at just above 5 and 8 times forward earnings, respectively.

Iron ore and coal are the main drivers of the dry bulk trade, accounting for some two-thirds of demand, but both are highly dependent on China, making the shippers that own bigger vessels more vulnerable to demand swings in the world's biggest commodity consumer.

Sterne Agee expects Baltic Dry Index spot rates to drop 16 percent this year and 9 percent in 2012, noting these declines will be hardest felt by those owning capesizes, where fleet growth is seen at 17 percent this year and 14 percent in 2012.

For capesizes, the brokerage forecast a 25 percent fall in spot rates this year to below $25,000 a day. Only three years ago, owners of these vessels could charge day rates in excess of $100,000 a day.

Supramax rates are seen dropping about 7 percent to $20,845.

"The largest part of the order book concerns the larger ships, the capes. It is actually the capes that are of a bigger concern to everybody in the industry," said Michael Bodouroglou, chairman and CEO of Greece's Paragon Shipping Inc , which has smaller supramax and handymax vessels among its fleet.

"The panamaxes, the supramaxes and in particular the handies I think they will fare a lot better particularly in the second quarter which is the season where the grain trades pick up from South America etc -- these are trades which are accommodated in the smaller sizes," he told Reuters.

The Baltic capesize Index <.BACI> has fallen by two-thirds in the past 3 months to its lowest in more than 2 years. Rates for supramax vessels were faring slightly better, though the Baltic's supramax index <.BASI> has dropped by a quarter in the last 3 weeks.

"In the next few months, a moderate amount of cargo demand is likely to continue to surface, which is likely to result in supramax and handysize rates remaining at healthy levels," said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research.

"Global grain demand remains strong and will lend support to rates once the South American export season kicks in to full gear."

The U.S. Commodity Futures Trading Commission is immersed in drafting dozens of rules to assist it in increasing oversight of the once opaque over-the-counter derivatives market, widely blamed for exacerbating the recent financial crisis.

Among the rules it must craft is what the definition of an agricultural commodity is? Of course, corn, cotton, soybeans and livestock, among other items, fall into this realm.

 But what about those "other foods" such as brussels sprouts, artichokes, cauliflower, or anything with curry? A former CFTC chairman says they are "abhorrent to American sensibilities" and should be banned.

"Like every U.S. citizen, there are certain agricultural commodities that are abhorrent to me," said Philip McBride Johnson, who is now with the law firm Skadden, Arps, Slate, Meagher & Flom.

 In a comment letter to his former agency, he said there is a "natural link" between defining an agricultural commodity and a provision in a law that requires the regulator to protect the public by forbidding the listing of certain products that "are abhorrent to American sensibilities."

Clearly banned under this act are financial products based on wars, terrorism, and assassinations. If Johnson has his way, regulators will be able to protect consumers from a dozen foods that don't mesh with his palate.

"I truly hope that the Commission does not waste this rare opportunity to rid the world of these dreadful excuses for agricultural commodities, and I appreciate this opportunity to contribute to the Public Good," he said.

To view Mr. Johnson's letter please go to: http://link.reuters.com/wez29p

Photo credit: Reuters/Darrin Zammit Lupi (Farm workers harvest artichokes in California April 2008)

Russia’s ban on grain exports as a heat wave parches crops in the world’s third biggest wheat exporter has raised questions whether such export curbs break World Trade Organization rules. Russia is not a member of the WTO, and it remains to be seen how its new grain policy will affect its 17-year-old bid to join. But other grain exporters, such as Ukraine, which is also considering export curbs, are part of the global trade referee.

WTO rules are quite clear that members cannot interfere with imports and exports in a way that disrupts trade or discriminates against other members. But in practice most WTO rules aim to stop countries blocking imports – shutting out competitor’s goods to give their own domestic producers an unfair advantage.

Saudi Arabia and other members of the oil cartel OPEC (not all of whom are members of the WTO) routinely control the production and hence export of oil to defend target prices, but have not faced challenges at the WTO.

What can be challenged are restrictions on exports designed to hurt competitors. The United States, European Union and Mexico are currently suing China at the WTO over Beijing’s export duties and other restraints on raw materials. They argue that these make the raw materials more expensive for foreign competitors, putting them at a disadvantage to Chinese processors.

The fact is that many WTO rules have an opt-out for national security, whether that is defence, censorship to protect public morals, special treatment of banks to protect the financial system, or food security.

Article XI of the core treaty of the WTO, the General Agreement on Tariffs and Trade, says that apart from duties, taxes and similar charges, you cannot impose any bans or restrictions on imports or exports such as quotas or import or export licences.

But it goes on to say:
“The provisions of paragraph 1 of this Article shall not extend to the following:

(a) Export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party; …”

While the right of a country to protect its own food supply is unchallenged, many economists argue that export bans or other restrictions can make a global food shortage worse.

That was certainly the case in the 2008 food crisis when food prices rose to record levels, triggering shortages and riots from Bangladesh to Haiti. There are fears that rising grain prices now could stoke unrest again.

A proposal in early 2008 by Japan and Switzerland to tighten rules on export restrictions in the light of rising prices drew little support from developing countries.

Even inside the countries that use them, export restrictions can be unpopular and have perverse effects. Export taxes on grains imposed by the Argentine government prompted a rebellion by Argentine farmers in 2008 and have made it unprofitable for small farmers to grow corn and wheat, shrinking harvests of those crops.

Now the World Bank has called on countries to avoid policies that could precipitate a crisis -- such as a food export ban. As the problem won't be resolved at the WTO, it seems likely that the question of some kind of global "architecture" for food and agriculture will come up at next month's United Nations conference on the Millenium Development Goals,  or at the next G20 summit in Seoul.

PHOTO CREDIT: Russian grain harvest REUTERS/Mikhail Voskresenskiy, WTO protest REUTERS/Denis Balibouse, Haiti demonstration REUTERS/Eduardo Munoz, Argentine protest REUTERS/Enrique Marcarian

Wheat's rise to 2-year highs was caused first by heavy rains in Canada and now by a Russian export ban that was triggered by its worst drought in decades. There are floods in Pakistan, another major wheat grower. But while the wheat market shenanigans are triggering much hand-wringing across developing nations, Argentina, one of the world's top seven wheat exporters, may be set for a windfall.

Farmers there are increasing wheat plantings, the Buenos Aires Grains Exchange says. The South American country is expected to export around 8 million tonnes of wheat in the 2010-2011 year. With wheat futures on the Chicago Board of Trade at around $8 a bushel, a very simple calculation shows export revenues are going to very significant.

Investors are taking note.

RBC analysts are advising their clients to buy the Argentine peso against the dollar. The peso is trading at 3.933 at present but currency forwards markets are pricing in a 2.1 percent fall in the peso's value over the next three months. RBC reckons they could be wrong and sees "very strong grain commodity prices supporting higher FX export inflows."  That it hopes, will keep the peso stable to the dollar. Buying the peso now would mean a 2.1 percent gain over 3 months or almost 9 percent in annual terms.

Nick Chamie, strategist at RBC, now expects Argentina's economy to grow 6.5 percent this year -- more than the 5 percent he originally predicted. He points out the stronger wheat price has had a knock-on effect on other grains -- prices for soy and corn, of which Argentina is a top exporter, are up 11-13 percent over past month.

Arentina has a bad reputation with investors -- it defaulted on $100 billion in debt in 2002, a record for any sovereign. It only recently finished restructuring defaulted debt and is hoping to come back to bond markets soon. The grain price bonanza could make its job easier. Strong grain export revenues have already boosted central bank coffers to a record $51 billion.

Chamie thinks Buenos Aires could possibly issue a bond soon, global markets permitting. Its brimming coffers mean it can hold out for a yield closer to 9 percent rather than the 10 percent it was targeting earlier this year he reckons, adding: "Important will be how long the wheat price surge lasts ."

Breaking the back of negotiations for a new climate pact after the Kyoto Protocol expires in 2012 is proving hard work even though the talks’ chair hopes to have a new negotiating text on the table by the end of the week.

Developing nations are still blaming the rich for global warming and the issue of who will contribute most to climate financing is still a matter for debate.

A year-end meeting in Cancun looms closer and the pressure is on to get the job done.
Yet, the acronyms being bandied around — LULUCF, CDM, AAU, AWG-KP, AWG-LCA, REDD, to name a few — are enough to make your head swim.

Even a Chinese negotiator on Tuesday admitted he did not understand a complicated forestry and land use presentation the previous day by the European Union.

Talks kicked off on Monday with a three-hour session during which countries spent an inordinate amount of time thanking the chair and congratulating the new U.N. climate chief Christiana Figueres on her post.

Delegates didn’t manage to finish the day’s business by the evening and had to continue into Tuesday, despite calls from the chair of the talks to keep to a very tight schedule.

Getting down to business was hampered further after the Saudi Arabia delegation withdrew calls for Oxfam and WWF to be banned from the talks for five years.

At the last conference in June, activists broke the nameplate in front of the Saudi delegation, threw the bits down a toilet and took photos.

The incident, though carried out by two individuals who have since been barred from talks, created a furore which threatened to overshadow the June meetings.

“Saudi Arabia is a forgiving society, and our culture allows us to forgive whoever commits a wrong against us, as long as he or she admits it and apologises,” said the country’s head negotiator Mohammad Al-Sabban this week.

Now wrapped up and hopefully forgotten, it is hoped that the talks can get down to getting some kind of consensus on emissions cuts and how much countries need to spend to help developing nations affected by climate change.

At least, that is the message that Royal Bank of Scotland's commodities chief Nick Moore has been giving in recent presentations -- and he thinks it might happen.   The gist is that gold is now at a record price but banks have not come close to  meeting their sales allowance for the year.

Under the Central Bank Gold Agreement there is a quota of 400 tonnes that can be sold by central banks within a 12 month period and with only about three months to go in the latest period less than 39 tonnes has been sold.  At today's price that remaining 361 tonnes is worth some $14 billion.

Moore believes that euro zone central banks in particular may increase their sales because of the record price and the deteriorating fiscal positions.  Furthermore, he reckons the price of gold will come down over the next 12 months as its  safe-haven appeal eases and inflation expectations fade.

Among the so-called PIGS -- Portugal, Italy, Greece and Spain -- Italy is the major gold holder with qround 2450 tonnes. But Portugal has some 380 tonnes,  Spain 280 and  Greece 112.

Might current prices not tempt them to selling a  few billion euros worth over the next few months  to help balance the budget a bit?

What do gold and wine have in common?

Price.

Well, too high of a high price, according to Jeffrey Rubin, director of research at Birinyi Associates, the stock market research and money management firm.

Rubin told the Reuters Investment Outlook Summit on Tuesday that he thought gold prices were "certainly a little frothy" at current levels and that he would rather be a buyer of the gold miners such as Newmont Mining Corp, Barrick Gold Corp, or Freeport-McMoRan Copper and Gold Inc. Gold hit an all-time high  above $1,250 an ounce on Tuesday as investors piled in due to fears that European credit contagion could lead to a double-dip recession.

Rubin isn't expecting a double-dip U.S. recession, saying the chances are slim. He also felt stock prices were likely near a bottom. Not so for the price of a wine? A good year is already priced in, so to speak.

In the spirit of austerity, we asked Rubin what personal spending he might curtail. For a wine collector with a 1,500 bottle collection, the answer was bitter.

"Some of my high-priced wines. I'm big wine collector," he said, adding that he keeps some at his home but most in a special storage facility.

"There are some wine purchases that I won't be doing, and also eating out as much. Part of that is because we like to cook a lot," he said.

"Originally when I started collecting wine, it was one, because I liked to consume wine," Rubin said.

As his interest deepened he found what he was buying was appreciating in value, "significantly."

"I thought of it almost as part of a second asset class, another asset class, understanding the risks, the liquidity and storage costs," he said.

"I built up a pretty significant database tracking some of these wines over a long period of time. Some of the wines now-a-days are so expensive and it is priced into it already.  If you look at some of the 2005 Bordeaux that were selling at $3,000 a bottle, and the '82 Chateau Margaux, I actually did buy it for my mother when it first came out in futures at $56 a bottle. Now it is worth $1900 a bottle, and she drank it a couple of years ago, and there goes my inheritance," he said.

"I find now that the wines will not appreciate as much because they are already starting at such an obscenely high price."

Salut.

“Our train counts are three times what they were last year,” said Bruce Brossman, director of reservations and sales at the Grand Canyon Railway, which expected to sell out on Memorial Day weekend.

The Grand Canyon itself typically draws large crowds over long holiday weekends, but secondary attractions like the two-hour scenic train ride up from Williams, Arizona, suffered in the recession.

Brossman says much of the rise in bookings was due to resurgent consumer confidence.

“Last year was a really tough time and people were really hunkered down and not spending discretionary dollars, and I think that there’s pent-up demand for travel,” Brossman said.

“Last year, everybody hunkered down,” said Tim Kirwan, general manager of the InterContinental Boston hotel, operated by InterContinental Hotel Group .

“They wanted the least expensive room rate and they essentially wanted to go across the street and get a coffee at the donut shop and forgo breakfast,” Kirwan added.

But this weekend, the hotel served 452 breakfast and brunch meals on Saturday, Sunday and Monday, nearly 10 percent more than the previous year, with guests paying $24 for breakfast and $32 for brunch.

“We were jammed,” Kirwan said. “There didn’t seem to be any hesitation at all in terms of spending up.”

The increase in spending may have extended to the gasoline pump– the Illinois Tollway, reported a 5.2 percent uptick in transactions over the holiday weekend (Thursday, May 28 through Monday May 31).

Experts say the uptick in travel is likely to continue through the rest of the summer.

Did you travel over Memorial Day weekend? Are you planning to spend more on travel? Will you travel more or less than last year?

(Reporting by Deepa Seetharaman in New York, Andrew Stern in Chicago, Dan Whitcomb in Los Angeles, Tim Gaynor in Phoenix and Barbara Liston in Orlando)