China-owned, US pork producer imports corn as US pork sales to China soar
Chinese-owned US pork producer Smithfield is snapping up cargoes of cheap South American corn over fears that immediate logistic woes and worries over the 2019/20 new corn crop may choke supply, market sources told Agricensus this week.
The news comes as US export sales of pork to China soar more than 1000% year-on-year as the world’s biggest pork consuming nation battles with its own supply woes amid an outbreak of African swine fever that is set to cut the nation's pig herd by 30%.
US net pork sales to China totalled almost 40,000 mt this week, USDA data showed Friday, leaving the total commitment this marketing year at 234,000 mt so far.
That compares with just 20,000 mt at this point last year.
“Smithfield has bought cargoes from Santos loading and are looking for some more for shipment into North Carolina,” one market source said.
The result means that a Chinese-owned, US-based pork producer could feed pigs with cheap South American corn to help facilitate pork exports to China.
All at the same time as the US and China are locked in a trade war that is impacting the global agricultural markets and hitting US farmer incomes.
Big pig producer
US-based Smithfield is the largest pig and pork producer in the world with the move coming after rumours that corn sourced from Argentina had also been moved to the US state, which is on the country’s eastern seaboard.
“Argentina corn was reported to Wilmington (North Carolina). Brazil, I know it has sold four 2019 cargoes and another two for 2020,” an Argentina-based source said.
Smithfield operates the largest pork processing facility in the world, capable of handling 35,000 pigs a day, at Tar Heels in North Carolina, approximately 100 kilometres northwest of the port of Wilmington.
Although US-based, the company is owned by China’s WH Group following its acquisition in October 2018.
Argentina-based market sources mulled whether the impact of corn planting fears is weighing on domestic end users.
“I think that corn end users in the US are worried on physical corn… This smoke makes me think that there is a big fire somewhere. Do they expect a big impact on yields?” a third source said.
US corn futures and cash prices have been forced higher as a seemingly bottomless cocktail of rain and floods has swamped fields, prevented planting, and played havoc with logistics.
“I have never heard (of Smithfield buying in South America) ... but as I have heard it's due to the cost of bringing down corn from the Midwest... so I guess Mississippi's flooding is enabling this trade,” the first source said.
US Gulf FOB prices reached $198/mt on Thursday, putting them close to $30/mt above the Argentina FOB Up River market.