By Ana Mano and Roberto Samora
SAO PAULO, June 4 (Reuters) - Archer Daniels Midland Co and other grain traders are selling Brazilian corn to Smithfield Foods Inc in the United States, where wet weather has reduced plantings, said two sources with knowledge of the matter. The sources, who requested anonymity to discuss sensitive market information, said Smithfield owns port facilities on the U.S. east coast and sometimes buys corn abroad because of the cost of shipping grains from the domestic corn belt.
"We are just finding a destination for Brazil corn and supplying those who know there will be a shortage ... Just being faster and nothing else," said a third source close to ADM. ADM declined to comment. Smithfield, a subsidiary of China'sWH Group , did not return a request for comment.
The other source said Paraguay and Argentina are also shipping corn to the United States, with around 1 million tonnes now under contract for shipment from South America to the United States.
A record delay in corn planting in the United States, the world's largest producer and exporter, is likely to drive demand for Brazilian corn this season as U.S. farmers struggle with heavy rains, according to analysts and market data. Only 67% of U.S. corn was planted by June 2, well behind the five-year average of 96%, the U.S. Department of Agriculture said. Brazil's government forecast corn exports would grow by 25% this season, to 31 million tonnes, even before the weather-related issues affected U.S. corn plantings. The last time Brazil sold significant amounts of corn to the United States was during a drought in 2012 and 2013. Brazilian corn exports to the United States at the time totaled 1.7 million tonnes, according to government data. Increasing Brazilian exports will also be key to reducing carry over stocks of around 16.5 million tonnes, analysts said, referencing the government's latest grain report in May. "We started the season with the need to export at least 30 million tonnes," said Daniely Santos, grains market analyst at Céleres consultancy. With the prospect of a record crop of around 100 million tonnes of corn this season, Brazil will need to export even more to lower domestic supplies, she said. Brazil has started harvesting its second corn crop, which is planted after the soybean harvest, and farmers are reaping the benefits of favorable prices. Heavy rain in the United States helped lift prices in Chicago by about 15% in May.