Brazil meat industry resorts to wheat as stopgap for scarce corn

Published 2016-06-09, 12:00 a/m
© Reuters.  Brazil meat industry resorts to wheat as stopgap for scarce corn
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By Reese Ewing and Roberto Samora
SAO PAULO, June 9 (Reuters) - Brazil's troubled poultry and
pork producers are resorting to feeding their animals wheat as
an emergency substitute, a rare step for the industry as it
struggles with the worst-ever shortage and record prices of
corn, experts say.
The practice, not seen in a decade by one of the world's
largest animal protein industries, underscores how soaring local
corn prices and an unexpected supply crisis are spilling over
into other commodities markets and forced the industry to seek
alternatives.
In another twist in the months-long crisis, meat processors
are having to feed their hogs and chickens higher-quality grain,
normally used in flour for cookies or breads.
Supplies of lower animal-grade wheat sometimes mixed into
feedstock have run out.
Traders at three cooperatives in the southern grain states
reported isolated sales of wheat suitable for human consumption
to animal feed producers in recent weeks.
"It's not that wheat is cheaper. It's just that there isn't
any unsold corn around," one trader said at a cooperative in
Parana state.
Traders in Parana quoted prices of soft wheat at 800 reais
to 850 reais a tonne, which is equivalent to 48-to-51 reais a
60-kg bag. Corn has been quoted, but not easily found, at
50-to-60 reais a bag in the south until recently.
Luiz Carlos Pacheco at wheat consultants Trigo & Farinhas
said the meats industry has bought 220,000 tonnes of wheat since
May, as the extent of the shortage of corn became clear.
"Wheat sales for feed have occurred in volumes and prices
well above normal for this time of year," Pacheco said, adding
that 120,000 tonnes sold to the industry came from Rio Grande do
Sul, Brazil's second wheat growing state.
Another 100,000 tonnes came from Parana, Brazil's No. 1
producer.
Another trader said JBS SA JBSS3 , the world's largest beef
exporter and Brazil's No. 2 poultry producer, recently bought
6,000 tonnes of wheat for feed. The company did not respond to a
request for comment.
The volumes are tiny compared with the 11 million tonnes
consumed in Brazil each year and the 5-6 million tonnes it
grows. But if the buying continues, it could boost wheat prices.
In the past, the South American nation has been one of the
world's leading importers of wheat, with the bulk coming from
neighboring Argentina and Paraguay. High-quality North American
wheat regularly flows to Brazil, as well.
While it costs slightly less than corn, wheat's nutritional
value is inferior for fattening livestock, limiting how much
processors can rely on it.
Still for some, it may be a way of keeping operating as they
wait fresh supplies of corn when the winter corn crop gets
harvested in the coming weeks.
Some pork and chicken producers including the world's
biggest poultry exporter BRF SA BRFS3.SA have been forced to
close plants and slaughter sows that they cannot afford the
feed.
Graphic on Brazil's corn crisis http://tmsnrt.rs/1WgDNwB
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(Writing by Reese Ewing; Editing by Alistair Bell)

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