Smithfield Foods, the world's largest pork producer, has announced that it will import corn from Brazil in order to lower its feed costs.
The move shows that growing costs for US feeds affect the livestock and meat industry. The worst drought for years has hit the US corn belt deeply, leading to tight supplies and higher prices.
A Smithfield spokeswoman confirmed the company's decision to use Brazilian corn in its pig-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. It's unclear how much has been bought or when it will arrive in the US. Smithfield, headquartered in Virginia, has hog-production operations on the US East Coast and elsewhere.
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 United States from Brazil adds anywhere from $30 to $40 per ton to that cost.
"There's never been this big of a difference in price," Molinari said. "Brazilian corn is almost always at the same level as in the Gulf of Mexico, if not higher."
Analysts say it is unusual for an American livestock producer to import supplies from Latin America. The US is by far the world's biggest producer and exporter of corn. Tyson Foods, 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.