Corn quality has not hurt Cargill food products

CHICAGO Mon Mar 15, 2010 6:39pm EDT

CHICAGO (Reuters) - Low-quality corn from last year's wet U.S. harvest has not affected Cargill's food products and the quality of corn arriving this spring was not deteriorating compared with last autumn, the head of Cargill North American corn milling said on Monday.

"There were some quality issues but none of which has any impact whatsoever on our food products. So the food products we are producing are 100 percent safe," Alan Willits said at the Reuters Food and Agriculture Summit in Chicago.

Cargill corn milling, a unit of U.S. agribusiness giant Cargill Inc CARG.UL, grinds 1.0 million bushels of corn a day into corn sweeteners, corn oil, ethanol and livestock feed.

The U.S. food industry has been struggling with poor quality corn since harvest. A prolonged, wet autumn hurt the quality of the corn, resulting in lower test weights and high levels of mold and diseased grain kernels.

Livestock feeders have been hit hardest by the poor quality corn with hogs and cattle gaining weight at a slower-than-normal rate, thus increasing the time for producers and feedlots to get them to market.

"The industry I think has done a very good job of managing through this," he said.

"The market is really trying to determine where is the best place for those feed products."

U.S. processors have been posting big price discounts -- 5 to 10 cents a bushel on corn with test weights of 50 lbs (23 kg) or less. The standard "test weight" for one bushel of No. 2 yellow corn is 56 lbs. Similar discounts have been posted for grain with high levels of foreign material or toxins.

Just last week U.S. hog and pork producer Smithfield Foods Inc SFD.N warned that poor-quality corn will trim profits on hogs this quarter.

Willits said instances of corn containing vomitoxin, a byproduct of mold that can sicken animals if consumed in large amounts, were not expected to grow any worse than current levels in the coming months.

"It will be interesting to see what the spring brings but we don't have any reason to believe at this point to think that things are deteriorating from what we saw last fall."

(For other news from the Reuters Food and Agriculture Summit, click here)

(Reporting by Christine Stebbins; Additional reporting by Mike Hirtzer, Mark Weinraub, Karl Plume; Editing by Marguerita Choy)

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