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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed


15 February 2013

USDA GAIN: Korea Grain and Feed Update - February 2013USDA GAIN: Korea Grain and Feed Update - February 2013

Wheat imports in MY 2012/13 are expected to increase to 5 million tons, up 600,000 tons from the October forecast as Korean feed millers contracted for more Indian feed grade wheat. In MY 2012/13, corn consumption is revised to 8.7 million MT, up 0.7 million MT as a result of greater demand for feed corn due to higher animal inventories. Under the 2013 Minimum Market Access (MMA) rice purchasing plan, the United States is expected to have more opportunities to sell medium grain, as the Korean government has allocated 37,498 MT of medium grain and 63,000 MT of optional varieties under the MFN quota.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Wheat

Consumption:

MY 2012/13 wheat consumption is revised to 5 million tons from the previous forecast, up 400,000 MT due to higher feed wheat use for animal compound feed as feed grade wheat contracts increased more than anticipated. Milling wheat consumption is unchanged from the previous year. Pasta exports are reflected in the consumption table for MY2010- MY2012.

Wheat Trade:

MY 2012/13 wheat imports are expected to increase to 5 million tons, up 600,000 tons from the October forecast due to increased contracts of Indian feed grade wheat, of which 2.4 million tons are for milling (including flour and pasta imports on a wheat equivalent basis) and 2.6 million tons for feed.

According to trade and sales contract data of Indian origin and optional origin, more than 2.3 million tons have been contracted with delivery for the first nine months in MY2012/13. International traders expect Korea to make additional contracts of 500,000 MT for the remaining three months in the current marketing year despite prices of feed grade wheat being US $20 per ton higher than feed corn. Imports of U.S. wheat in MY 2012/13 are expected to remain unchanged from the previous forecast.

PSD reflects Korea’s exports of pasta on wheat basis since MY 2010/11.

Corn

Consumption:

MY 2012/13 corn consumption forecast is revised to 8.7 million MT, up 0.7 million MT from the previous USDA official forecast due to greater demand for feed corn from the swine sector. Food, seed, and industrial (FSI) corn consumption forecast remains around 2.1 million tons unchanged from the previous forecast due to stable demand for processed corn products.

In MY 2012/13, post estimates corn inclusion rate at the range of 35 - 37 percent of total ingredients for compound feed production, 3-5 percent higher from the previous year’s rate. This ratio is projected to remain relatively constant for the foreseeable future based on the corn preferences of local animal growers.

Compound feed production is expected to remain at 18 million tons in MY 2012/13, unchanged from the previous year due to bearish trends in domestic meat prices resulting from strong animal inventories following the recovery from the FMD outbreak in 2010. Korean animal growers are trying to reduce their animal inventories amid an uptrend in compound feed prices inflated by raw ingredients.

Major corn processors have continued using non-GM corn imported from Serbia, Hungary and Brazil for food. For industrial purposes, GM corn imported from the United States is primarily used. Many food processing companies have been reluctant to use ingredients sourced from biotech corn.

Trade:

MY 2012/13 corn import forecast is revised to 8.6 million MT, up 600,000 tons from the previous USDA forecast due to increased feed corn imports to meet a greater demand for compound feed in the swine sector, while feed grade wheat imports are expected to slow in the second half of the year.

As of the end of December 2012, importers contracted 5.6 million tons of corn from October 2012 to June 2013 deliveries. Most of the contracted purchases for feed corn to date are optional origin at seller’s option from South American countries with a price range of $257-340 per metric ton CNF, while corn processors have contracted for No. 2 GM/non-GM yellow corn from South America and conventional corn from Eastern Europe with a price range of $260-400 per metric ton CNF.

Most recent buying contracts have been stabilized in a range of $310-320 per ton CNF for feed corn and $ 330-340 for processing corn.

Rice

Production

No change from the previous report.

Consumption

Korea’s rice consumption pattern remains unchanged from the previous forecast.

Trade

In MY 2012/13, rice imports remain unchanged from the previous forecast at 600,000 metric tons as the Korean government is trying to deliver the 2013 MMA commitment within the corresponding calendar year. U.S. rice exports are revised to 200,000 MT, up 20,000 MT from the previous forecast because of an increased MFN quota allocation for medium grain variety for table purpose.

2013 MMA Purchasing plan:

Under the 2013 Minimum Market Access (MMA) purchasing plan, Korea will purchase 388,353 MT of rice, comprised of 183,125 MT under the global quota (GQ) and several country specific quotas (CSQ) totaling 205,228 MT. 84 percent of the US CSQ quota has been allocated to table rice this year, compared to 80 percent in 2012.

The United States is expected to receive from 120,000 to 150,000 MT, or roughly 31- 39 percent of the total MMA volume. The anticipated U.S. share is calculated by adding the 37,498 MT of medium grain and 63,000 MT of optional varieties allocations between short grain and medium grain under GQ to the 50,076 MT of U.S. CSQ. Please refer to GAIN report KS1305 for more details.

The 2013 U.S. CSQ, totaling 50,076 MT, is made up of 42,291 MT of table rice and 7,785 MT for processing. The U.S. table rice allocation of 42,291 MT compares to 40,056 MT in 2012, a 6 percent increase in response to a greater demand for U.S. medium grain in the Korean consumer market. Under the 2013 MMA CSQ quota, Korea has already purchased 20,000 MT of U.S. #1 MG for table purpose, delivering from March through May 2013.

In MY 2011/12, rice imports revised to 380,000 metric tons, up 20,000 metric tons from the previous estimate.

2012 MMA Tendering Results:

Korea's contracts for rice imports under the 2012 WTO Minimum Market Access (MMA) system expanded market access opportunity for U.S. rice suppliers. In addition to the U.S Country Specific Quota of 50,076 MT, the United States successfully contracted 50,825 MT or 31 percent of the total Global Quota of 162,778 MT. With a total 100,901 MT, the U.S. share of the 2012 MMA was 27 percent with contracts valued at US$78 million. Please refer to GAIN report KS1308 for more details.

Auctions for Imported Table Rice:

aT has sold table rice shipments to Korean wholesale and retail rice markets through its public auction system since 2006. On the other hand, the Ministry of Food, Agriculture, Forestry, and Fisheries (MIFAFF) has distributed processing rice to end-users such as food processors and alcoholic beverage producers at a set price throughout the year since 1996.

The 2011 MMA shipments of 104,297 MT of table rice was delivered from late 2011 until June 2012. aT began table rice auctions for U.S. rice in December 2011 and sold out by the middle of August 2012, while Chinese table rice was auctioned from March 2012 through early January 2013, and Thai table rice still auctioning since February 2012. Average auctioned prices for both U.S. #1 and Chinese #1 were lower than #3 which belatedly started their auctions when the domestic rice market trended upward in 2012.

In response to much more favorable consumer confidence in U.S. medium milled rice, aT has continued selling U.S. medium rice for both #1 and #3 under the 2012 MMA quota of which the first batch of 20,000 metric tons was delivered to Korea in the first half of 2012 soon after completing the auctions of U.S. table rice under the 2011 MMA quota in the middle of August 2012. Remaining portions of U.S. table rice under the 2012 MMA quota are scheduled to deliver by the end of February 2013.

February 2013

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