The world’s largest producer of pork, Smithfield Foods Inc. (NYSE: SFD) said today that it would begin importing corn from Brazil to use as feed for the company’s livestock. This is an unusual move for US food producers because the US is the world’s largest grower of corn and corn prices in the US typically are lower than import prices once transportation costs are figured in.
But a report from MarketWatch cites a consultant who reported that corn at Brazilian ports is now selling for $290/metric ton compared with $345/metric ton on the US Gulf Coast. Shipping costs from Brazil add another $30-$40/metric ton to the cost.
Brazil anticipates a record crop this year of nearly 70 million metric tons, less than a quarter of the usual US production of more than 300 million metric tons. The US crop is being seriously damaged, though, by hot, dry weather in the nation’s corn-growing regions.
Other food producers have not revealed plans to import corn from Brazil or elsewhere, although Tyson Foods Inc. (NYSE: TSN), Hormel Foods Corp. (NYSE: HRL), and Pilgrim’s Corp. (NYSE: PPC) are likely candidates for consideration.
Shares of Smithfield are up 0.5% in the early afternoon today, at $18.26 in a 52-week range of $17.75-$25.12.