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Smithfield imports Brazilian corn
Smithfield Foods Inc., the world's largest pork
producer, said Tuesday it will import corn from Brazil, a move that
reflects how surging costs for U.S. feed grains are rippling through the
livestock and meat industry.
The worst drought in decades has battered the U.S. Corn Belt, leading to tight supplies and sharply higher prices.
Analysts say it is unusual for a U.S. livestock producer to import
supplies from South America. The U.S. is by far the world's biggest
producer and exporter of corn.
A Smithfield spokeswoman confirmed the company's decision to use
Brazilian corn in its hog-raising operations, after the Financial Times
reported earlier this week that meat companies including Smithfield had
arranged to ship Brazilian corn to the East Coast. She declined to say
how much of the feed the Smithfield, Va., company has purchased, or when
the first shipments will arrive. Smithfield has hog-production
operations on the U.S. East Coast and elsewhere.
Tyson Foods Inc., the world's largest chicken producer, declined to
comment on whether it has purchased Brazilian corn, citing a quiet
period ahead of an August earnings report.
Spot-market prices for physical corn in the U.S. surged early this year
Paulo Molinari, a consultant at Brazil's Safras & Mercado, said
corn at Brazilian ports is currently going for around $290 per metric
ton, compared with $345 in the U.S. Gulf of Mexico. Shipping corn to the
U.S. from Brazil adds anywhere from $30 to $40 per ton to that cost.
"There's never been this big of a difference in price," Mr. Molinari
said. "Brazilian corn is almost always at the same level as in the Gulf
of Mexico, if not higher."
Owen Fletcher in Chicago and Paul Kiernan in Sao Paulo contributed to this article.
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(END) Dow Jones Newswires
July 24, 2012 19:26 ET (23:26 GMT)