U.S. farm economy flowing in reverse as drought impacts persist
Coastal markets are adjusting to their own sense of dislocation.
Hog and poultry operations in the Southeast and along the East Coast have found foreign supplies cheaper than rail-delivered grain from the Midwest. Over all, the United States is set to import a record 165 million bushels in the year ending Aug. 31, a nearly six-fold increase from the previous year, according to USDA.
Wilmington Bulk LLC, a feed buying consortium of hog and poultry producers, has brought in more than 350,000 tonnes of mostly Brazilian corn over the past year, according PIERS, a company that provides trading data.
Pilgrim's Pride imported more than 175,000 tonnes through the port of Mobile, Alabama, between Feb. 8 and June 3. Rival producer Perdue Farms has imported smaller volumes into Norfolk, Virginia, the PIERS data showed.
The surge of grain imports led to record profits for the North Carolina State Ports Authority, which handled nearly 1 million tons of grain coming into the country at the Port of Wilmington in the fiscal year that ended July 30, said Laura Blair, senior director of external affairs. She was not able to provide data for prior years.
"The drought in the Midwest forced people to look at the supply chain and experiment with different ways to get grain where it's needed," she said.
The window is shutting quickly for South American exporters. With the southern U.S. harvest well underway, further import purchases are unlikely. Before the ships can make the two- to three-week sail from South American ports to the United States, cheaper new-crop prices will begin setting in.
Some yet-to-arrive cargoes will help bridge the gap to new-crop supplies.
The vessel Pos Aragonit is currently steaming toward the Port of Wilmington after loading grain in southern Brazil. The vessel Trans Pacific is at anchor off the Brazilian port of Paranagua and is scheduled to arrive at Wilmington by October.
Opportunity will dry up quickly for northbound shipments on the Mississippi River too. Once the Midwest harvest is in full swing, the agricultural industry will resume buying local corn.
"We're trying to bridge the gap," Baker said.