Brazil meatpackers explore wheat as feed alternative as corn prices rise

Large Brazilian meatpackers are turning to wheat as they try to fend off a rise in the cost of corn, the main livestock feed ingredient, meat lobby ABPA said on Friday

Francisco Turra, president of ABPA’s advisory body, told Reuters that demand from meat processors, who provide feed to the farmers who raise the livestock, is driving a rise in wheat planting intentions in his native Rio Grande do Sul state.

Wheat can fully replace corn as feed for pork and poultry, he said.

Citing data from the state agriculture federation Farsul, Turra said the area to be planted with wheat and other winter crops in 2021, starting next month, may grow from 1 million hectares (2.4 million acres) to 1.4 million hectares.

“High prices and delays in Brazil’s second corn crop have pressured meatpackers’ margins”

Meatpacking giants JBS and BRF have said they will buy winter crops such as wheat, triticale and barley to use as livestock feed, Turra said.

“Deals have been made in the futures market,” he added.

BRF said it is “always looking for the best alternatives that guarantee supply and competitiveness.” JBS declined to comment.

U.S. corn futures climbed to their highest in nearly eight years this week, driven by worries about dry conditions curbing yields in Brazil and cold weather slowing germination of the 2021 U.S. crop.

High prices and delays in Brazil’s second corn crop have pressured meatpackers’ margins, leading some companies to turn to Paraguay and Argentina for supplies.

This week, the government waived import duties on soy and corn from nations outside the South American Mercosur trade bloc, meaning Brazil could import corn from nations like the United States and Ukraine.

However, with “import parity” above $30 per tonne, buying corn from outside Mercosur still does not make economic sense, a trader said.

Using wheat as livestock feed is common in Canada and Russia, which don’t produce corn nor import it, said Turra, who served as Brazil’s Agriculture Minister between 1998 and 1999.