April 26, 2021


Major Brazilian meatpackers turn to wheat as corn prices surge


Brazilian meat lobby ABPA said major meatpackers in the country are turning to wheat as a livestock feed alternative with corn prices surging, Reuters reported.


Francisco Turra, president of ABPA's advisory body, said Rio Grande do Sul state has seen an increase in wheat planting intentions thanks to demand from meatpackers.


He said wheat can replace corn as livestock feed for pork and poultry.


Turra, citing state agriculture federation Farsul data, said the area to be planted with wheat plus other winter crops starting this month could rise from 1 million hectares (2.4 million acres) to 1.4 million hectares.


According to Turra, JBS and BRF will purchase winter crops such as wheat, triticale and barley to use as livestock feed, adding that deals have been agreed in the futures market.


Corn futures on the Chicago Mercantile Exchange surged to its highest in eight years, fuelled by concerns of dry conditions affected Brazilian yields and cold weather delaying germination in the 2021 United States crop.


Meatpackers' margins have been affected by the high prices and delays in Brazil's second corn crop, resulting in some firms importing from Argentina and Paraguay.


Last week, the Brazilian government announced a waiver in import duties for soy and corn from countries outside the Mercosur trace bloc, allowing importers to obtain corn from the United States and Ukraine.


However, one Brazilian trader that it does not make sense to buy corn outside the Mercosur bloc with "import parity" above US$30 per tonne.


Turra, who served as Brazil's Agriculture Minister between 1998 and 1999, said Canada and Russia commonly use wheat as livestock feed because they do not produce or import corn.


- Reuters