February 20, 2019

JBS SA to receive about 30,000 tonnes of corn from Argentina
 

Brazil's JBS SA will be receiving its initial shipment of about 30,000 tonnes of imported corn which will be used as feed at meat processing facilities in the Brazilian state of Santa Catarina, according to a source with direct knowledge to the development.

The origin of the shipment is Argentina, the unnamed source said. Last year, JBS brought in an equivalent of five ships from the country, amounting to a delivery of between 30,000 tonnes and 35,000 tonnes of corn each.
 

The source added that JBS had turned to importing corn, renewing a practice that was common for several months beginning from March 2018. This move suggests that meat processors, who are able to access other suppliers, will more likely be able to maintain sustainable operating margins given Brazil's weak infrastructure capabilities and legal insecurity stemming the government-set cargo prices instituted last year after a local truckers' strike.

The strike had disrupted supplies and exports from the country as truckers opposed an increase in diesel prices. It also caused operations at 167 meat production facilities to  be suspended, while at least 70 million chickens were culled as a result.

The event prompted the government to introduce minimum freight prices, according to Reuters. 

The source claimed that while other companies are seeking "alternatives in the market... they are slower to make decisions." In addition, as Brazil's Supreme Court has yet to rule on lawsuits that question the legality of the government's decision on cargo rates, "companies are reluctant to take on freight risk," the source added.

Furthermore, local farmers have been holding out for higher corn prices, leading to JBS' decision to acquire corn from Argentina.

"This, combined with more expensive freight in Brazil, makes importing (corn) attractive," the source said.

- Reuters