June 9, 2016 / 4:04 AM / 2 years ago

RPT-Brazil meat industry resorts to wheat as stopgap for scarce corn

(Repeats with no change)

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, 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 have been forced to close plants and slaughter sows that they cannot afford the feed.

Writing by Reese Ewing; Editing by Alistair Bell

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