Tyson does not rule out imports of Brazil corn

Tyson Foods Inc, the biggest U.S. meat producer, said on Monday that it has not ruled out buying Brazilian corn due to a drought devastating the crop in the United States, but added that its current domestic supply cost less than imports.

"We run the math constantly and when it works that's an avenue for us," said Donnie Smith, president and chief executive officer of Tyson Foods on a conference call with analysts.

"We've got a lot of truck corn bought from local farmers ... the imported values out of Brazil wouldn't compete with the costs that we've got," he said after the company announced its quarterly earnings.

Pork processor Smithfield Foods and poultry producer Pilgrim's Pride, a unit of Brazil's JBS, already have said they are importing corn from Brazil as the worst U.S. drought in half a century has sent domestic corn prices through the roof and made imports more attractive.

Tyson raises its own chickens while buying cattle and hogs to be processed into beef and pork.

The U.S. corn crop has been shrinking amid the expanding drought, with the U.S. Department of Agriculture in July cutting the size of the crop by 12 percent to 12.970 billion bushels. Analysts are expecting the department to cut its estimate further in a supply-demand report due on Friday.

Corn prices at the Chicago Board of Trade have soared more than 50 percent over the past two months, hitting a record high $8.28-3/4 a bushel on July 20, causing cattle ranchers and hog farmers to liquidate their herds as feed costs surge.

These producers have also been affected by the drought scorching pasture and lifting prices for hay.

Farmers in the South have begun harvesting their corn, with anecdotal accounts showing better-than-expected yields in states like Mississippi and Arkansas that were spared by the drought.

But about 75 percent of the U.S. corn and soybean crops are grown in the Midwest, where the drought spanning more than two-thirds of the contiguous United States is centered.

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