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


06 August 2012

USDA GAIN: South Korea Grain and Feed Update August 2012USDA GAIN: South Korea Grain and Feed Update August 2012

Compared to Post’s April 17 estimates (KS1230), for MY2011/2012, final wheat imports were lower than previous Post estimate, but still a record 5.2 MMT. Imports of U.S. wheat reached over 2 MMT, about half for feed. Estimated MY 2011/12 corn imports unchanged at 7.5 MMT, but imports from the U.S. lowered from 5.5 to 4 MMT. For MY 2012/13: wheat consumption and imports are unchanged at 4.9 and 4.6 MMT, respectively. Estimated corn imports unchanged at 8.0 MMT. However, estimated corn imports from the U.S. are lowered from 5.5 MMT to 5.0 MMT. Estimated milled rice production is increased from 4.2 MMT to 4.3 MMT due to higher area; estimated stocks will increase to 0.8 MMT.
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed

Wheat

Production:

Korean government has recently released official numbers of wheat production at 43,677 MT in MY2011, up 12 percent from the previous year.

Consumption:

MY 2012/13 wheat consumption remains unchanged from the initial forecast at 4.9 million tons, composed of 2.5million tons for feed and 2.4 million tons (including flour and pasta imports on a wheat basis.)

In MY 2011/12, total wheat consumption reached a record 5.2 million tons, an increase of 732,000 tons from the previous year due to greater demand for feed purpose. Feed millers have substituted competitively priced feed grade wheat for corn. Milling wheat for flour production was consumed at 2.2 million tons, down 7 percent from the previous year when millers increased flour production in the second half of MY 2010/11.

Trade:

MY 2012/13 wheat imports remains unchanged from the initial forecast at 4.6 million tons, of which 2.4 million tons are for milling (including flour and pasta imports on a wheat equivalent basis) and 2.2 million tons for feed.

MY 2011/12 wheat imports reached 5.2 million tons, up 9 percent from the previous year due to a greater import of feed grade wheat at much more competitive international prices than corn. Australia was a major supplier of feed wheat, followed by the United States and Canada. U.S. feed wheat exports to Korea reached about one million MT, or 35 percent of total imports of feed wheat in Korea. Accordingly, total imports of U.S. wheat more than two million tons. U.S. feed grade wheat is mainly composed of soft wheat or white wheat containing lower than normal protein contents.

Flour Trade:

MY2011/12 flour imports declined to 30,371 tons (41,548 tons wheat equivalent) because the SPC Group, Korea’s biggest bakery company started milling its own flour in lieu of importing flour. Flour exports also declined to 44,909 tons (59,879 tons wheat equivalent), down 7 percent from the previous year. Pasta imports remained unchanged, declining less than one percent from the previous year.

Corn

Production:

Korean government has recently released official numbers of corn production at 73,612 MT in MY2011, about one percent down from the previous year.

Consumption:

MY 2012/13 corn consumption forecast remains unchanged from the previous report at 8.1 million MT. MY 2011/12 corn consumption also remains unchanged from the previous report at 7.7 million MT based on the first nine months.

On the basis of the first eight months, compound feed production is expected to continue increasing to 17.5 million tons in MY 2011/12 and reaching 17.9 million tons in MY 2012/13 following the recovery of swine inventories. The corn utilization rate in total compound feed production has gradually fallen from 2008/09 (39 percent) to 2011/12. Due to rising feed wheat use, feed corn use ratio in MY 2011/12 is expected to fall to 32 percent of total compound feed production. For MY 2012/2013 Post estimated corn utilization at 35 - 40 percent of total ingredients. This ratio is projected to remain relatively constant for the foreseeable future based on the preferences of local livestock producers.

For the first nine months of MY 2012/13, corn consumption for processing is down 4.1 percent.

Monthly Trend of Compound Feed Production for Swine (Metric Ton)

Trade:

MY 2012/13 total corn imports remains unchanged from the April estimate at 8.0 million MT. however, estimated MY 2012/13 U.S. corn imports are lowered from 5.5 to 5 million MT, or about 62 percent of total Korean corn imports, considering current severe drought impact on U.S. corn exports.

Based on the imports for the first nine months, corn imports for MY 2011/12 are expected to stay around 7.5 million MT, remaining unchanged from the previous report. However, MY 2011/12 U.S. corn imports are expected to decline from 5.5 to 4 million tons due to less competitive prices than other origins such as the Black Sea and South America. In addition, the imports of US corn for processing have sharply declined to 300,000 MT for the first nine months because Korean corn processors have imported non-GM corn from Ukraine (372 TMT), Serbia (395 TMT), Hungary (226 TMT), South Africa (29 TMT), Brazil (44 TMT) Australia (40 TMT), Romania (58 TMT) and China (23 TMT). As of July 2012, Korean buyers have already completed corn contracts delivering in MY 2011/2012 (Oct/Sep) and continue making new contracts to deliver December arrival under MY 2012/13 (Oct/Sep). Most of the contracted purchases to date are for U.S. corn and/or optional origin at seller’s option among the United States, South America, South Africa or Europe including Black Sea.

In MY 2011/12, the United States is expected to account for 53 percent of total corn imports in Korea, with an estimated 67 percent of total feed corn imports and 15 percent of total food processing corn imports, respectively.

Milled Rice

Production:

MY 2012/13 rice production forecast is revised up to around 4.3 million tons – up 100,000 MT from the initial forecast due to higher actual planting area compared to planting intentions. In response to higher farm gate price since last fall, rice farmers increased rice area offsetting reductions by rice farmers who participated in rice reduction program. The completion of Four River Projects added some area in the rivers basin into the total rice planting acreage.

Trade:

The aT, the government’s state trading arm, manages the purchasing of all imported rice through tendering process and auctioning of imported table rice.

2012 MMA Tendering Process:

The Korean government has started purchasing 368,006 MT under 2012 MMA since February 2012. As of July 25, the aT, the state trading arm of the Korean government, has just purchased 119,031 metric tons (milled), about 32 percent of the entire the 2012 MMA import commitments with the remainder still being processed.

The United States was awarded 30,026 metric tons (milled) comprised of 11,133 metric tons (10,020 metric tons on milled basis) of brown medium grain rice at US$608.62 per metric ton, CIP under global quota (GQ) and 16,000 metric tons of #1 milled medium grain rice at US$ 719 per metric ton, CIF and 4,006 metric tons at US$ 693.99 per metric ton for table purpose, respectively, under country specific quota (CSQ). Post expects the United States to sell medium grain rice ranging from 90,000 up to 100,000 metric tons (milled) under the 2012 MMA.

Auctions:

The aT sells table rice shipments through a public auction system. On the other hand, the Ministry of Food, Agriculture, Forestry, and Fisheries (MIFAFF) distributes processing rice to end-users such as food processors and alcoholic beverage producers at a set price throughout the year. The 2011 MMA shipments have arrived from late 2011 till June 2012. Approximately 104,297 MT of table rice have been delivered over this period.

The aT kicked off table rice auctions for U.S. rice in December 2011, Thai rice in February 2012 and Chinese rice March 2012, respectively, under 2011 MMA. As of July 25th 2012, the auctions for U. S. rice imported under 2011 MMA have been successful to achieve auctioned off rate at 93 percent for #1 and 100 percent for #3, respectively, due to more favorable market response for U.S. table rice than other origins. The progress of auctioning for other origins has been comparably slow. In the second half, U.S. table rice imported under 2012 MMA will continue to be marketed through aT’s selling auctions. The average selling price of the #3 US milled rice was higher than the #1 because Korean government set the selling price about Korean Won 1,000 per Kg in the beginning of auctions in order to curb the inflated trend of domestic rice markets and then increased the selling price to the level of Korean Won 1,600 per Kg over time. The #3 US milled rice was sold out for May – July 2012 with the #1 US milled rice selling from December 2011 through July 2012.

Stocks:

MY 2012/13 ending stocks (at the end of October 2013) are forecast to increase to about 0.8 million tons from the previous report, 16 percent of total consumption, as 2012 domestic rice production is expected to increase by 100,000 MT due to increased planting area.

August 2012

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