U.S. cows and pigs gorge on bakery rolls, pet food as corn prices surge

FILE PHOTO: Cattle rest in a field outside a farm in Peosta, Iowa, U.S., July 26, 2018. REUTERS/Joshua Lott/File Photo

By Tom Polansek

CHICAGO (Reuters) – U.S. farmers are feeding their livestock everything from outdated pet food and leftover bakery rolls to crops imported from South America after unprecedented spring planting delays boosted prices for locally grown corn.

Corn is typically used to fatten hogs, cattle and poultry, but its high price has farmers in the $150 billion U.S. meat and dairy industry looking elsewhere to keep down costs.

Agricultural cooperatives, equipment dealers and plants that process corn into ethanol have already been strained because farmers were unable to plant millions of acres this spring due to widespread flooding.

Meat producers are now turning to substitutes in an attempt to keep production costs down and stretch out supplies of corn held in storage. Many expect corn prices will climb even higher once harvesting starts this fall because yields are expected to be weak due to springtime flooding.

Feed is typically the biggest cost of raising farm animals, so adjusting diets has become critical for producers who are also grappling with a U.S.-China trade war that has hurt exports of American agricultural products including pork.

Higher corn prices could raise costs for meat producers like Tyson Foods Inc, which reports earnings on Monday.

CAKES AND CANDIES, ANYONE?

Ohio farmer Jim Heimerl, who sells 700,000 pigs a year, swapped out corn for dry pet food, which he acquires through a broker and can be outdated or mislabeled. Heimerl is also feeding his hogs more wheat middlings, which are a byproduct of the flour milling process.

“We’re already starting to ration our corn out,” he said.

The U.S. Department of Agriculture predicted in July that farmers will harvest the smallest corn crop in four years. Many grain traders and analysts expect the agency will lower its harvest estimate after surveying farmers again about plantings.

Most-active corn futures hit a five-year high in July and are now trading around $4 a bushel on the Chicago Board of Trade, up 7% from a year ago. Farmers have seen prices climb even more in cash markets in areas where rains washed out plantings.

“It’s only going to get worse and it’s all because of the weather,” Heimerl said.

In Minnesota, farmer Randy Spronk is using recycled bakery byproducts such as breads, cakes and candies for 10% of his hogs’ rations to reduce his need for corn.

“The bushels that are here are precious,” he said. “We’re trying to make them last as long as we can.”

Spronk buys the crushed bakery goods from ReConserve, which says it is the country’s largest recycler of bakery, cereal grain and snack food byproducts.

The bakery goods are safe and nutritious for livestock but do not meet manufacturers’ packaging or quality standards for human consumers, said Bryan Bergquist, ReConserve’s vice president of feed sales.

“In times like this, when your main input in feeding livestock goes up, you start looking for best cost alternatives,” said Omarh Mendoza, nutrition director for The Maschhoffs, the largest U.S. family-owned pork producer.

CORN FROM BRAZIL

North Carolina-based Prestage Farms has been feeding distillers’ dried grains, an ethanol byproduct, to hogs in Iowa and has also imported corn from Brazil, said John Prestage, whose family owns the company. North Carolina farms use corn from Midwest states including Ohio and Indiana, where cash corn prices will be strong, he said in an email.

“We are looking everywhere to minimize the impact of high priced corn,” Prestage said.

Smithfield Foods [SFII.UL], a Prestage Farms partner, books the corn imports and is looking to bring in more, Prestage said. Smithfield, owned by China’s WH Group Ltd, declined to comment.

The USDA last month also increased its estimate for the amount of wheat that will be used for feed and residual purposes in 2019/20 by 7% from June to 150 million bushels. That is much smaller than corn feed and residual use of 5.175 billion bushels, but up 65% from the previous year.

Poky Feeders, which raises about 125,000 cattle on three feedlots in Kansas, changed its grain rations to be half wheat from all corn in July, said Chief Executive Joe Morgan. Cattle gain weight well when they eat wheat, he said.

“Most of the time it’s just too high compared to corn,” Morgan said about prices. “Right now, it’s not.”

(Reporting by Tom Polansek in Chicago; Editing by Caroline Stauffer and Matthew Lewis)

China bans pig shipments from areas hit by African swine fever as disease spreads

FILE PHOTO - Piglets are seen by a sow at a pig farm in Zhoukou, Henan province, China June 3, 2018. Picture taken June 3, 2018. REUTERS/Stringer

BEIJING (Reuters) – China reported a new case of African swine fever in Xuancheng in Anhui province on Monday, the second in the city in as many days, raising the risk for farmers as the disease spreads rapidly in the world’s top pork producer.

The new outbreak, the seventh in China since early August and the third in the eastern province of Anhui, occurred on a small farm of 308 pigs, killing 83 of them, said the nation’s agriculture ministry.

The highly contagious disease was also found on another small farm in Xuancheng on Sunday.

“It looks like it’s accelerating,” said Pan Chenjun, senior analyst at Rabobank, adding that she expected farmers to start selling off pigs before they are forced to cull animals if the disease hits their own or neighboring farms.

“I think in coming days they will liquidate their herds,” she said. That would hurt prices for all farmers, even those able to keep the disease at bay.

China has now discovered seven cases of the deadly disease in five provinces: in Liaoning in the country’s northeast, in central China’s Henan, and in the eastern provinces of Anhui, Jiangsu and Zhejiang.

China’s agriculture ministry said on Sunday it will shut live hog markets in the affected provinces. It also imposed a ban on transporting pigs and pork products from the provinces, the most drastic measure taken so far, and one set to have major repercussions across the supply chain.

The prohibition will effectively prevent slaughterhouses and meat processing factories from using pigs or pork from affected regions. Stopping pigs and pork products from being transported out of those regions will also cause major disruption to farmers, traders and slaughterhouses.

“This will be a very serious situation for large companies with several farms in the northeast,” said Pan.

Northeastern provinces do not have sufficient slaughterhouse capacity and typically transport pigs to provinces in the south.

In Henan province, one of China’s top pig-producing regions, animal stocks have jumped because farmers there can no longer sell animals to other parts of the country, said an agent surnamed Ni who trucks pigs around the province.

“I haven’t had any business in the past two days because there are too many pigs in the market. Prices are bad and there is not much demand,” he said. Ni said he used to transport up to 700 pigs a day, but current volumes are around 700 a week.

The government also said live hogs from unaffected provinces cannot be transported through those that have reported infections.

Until now, authorities had only stopped transportation of pigs and products and shut live markets in and around infected areas.

“Costs will go up and it will take much longer to get pigs to the consumption areas,” said Ni.

Shares in meat processor Shandong Longda Meatstuff Co Ltd fell more than 7 percent on Monday morning to 6.7 yuan, before recovering later in the day.

Major feed and pig farming firm Beijing Dabeinong Technology Group Co Ltd fell by 2.1 percent, while New Hope Liuhe Co Ltd fell 1.5 percent in morning trade before rebounding.

Xuancheng city is around 70 km (45 miles) southeast of Wuhu city, where another African swine fever case was reported last week.

The ministry said it had culled more than 38,000 hogs as of Sept. 1 as it tries to contain the outbreak.

Last week, the government warned it cannot rule out the possibility of new outbreaks, highlighting the challenge for the government in controlling the disease.

The virus is transmitted by ticks and direct contact between animals, and can also travel via contaminated food, animal feed and people moving from one place to another. There is no vaccine for the disease, but it is not harmful to humans.

(Reporting by Judy Hua, Stella Qiu, Hallie Gu, Josephine Mason and Dominique Patton; Editing by Richard Pullin and Tom Hogue)