Process Management

News last update:6 Aug 2012

Cull causes feed grain demand in South Korea to fall

Millions of pigs, cattle and poultry were culled during late 2010 to April this year in South Korea, due to disease, and as a result the demand for feed grain is expected to fall by as much as 10%, according to a local feed group.

Kim Chi Young, a director for grain purchases at Korea Feed Association, the nation’s top grain-buying group, said in an interview, that Consumption may fall 7-10% in 2011 from an estimated 9.35 million metric tons for 2010

South Korea destroyed about 9.7 million cattle, pigs and poultry after outbreaks of foot- and-mouth and bird-flu last winter.

 “The Korean livestock industry may remain sluggish for a long time after the outbreaks,” said Kim at the group’s headquarters in Seoul. “It will probably take a long while for the pork industry, in particular, to recover.”

Corn futures in Chicago have doubled in the past year, climbing to the highest since 2008, as global supplies failed to keep pace with demand. South Korea (third largest corn buyer), which relies on imports for almost all its corn and wheat requirements.

Demand for corn may fall more than wheat this year as feed makers would seek to increase use of wheat at the expense of corn, Kim said, without giving a forecast. Output of the so- called compound feed made from various ingredients including corn and wheat may decline as much as 10% this year from 17.53 million last year, he said.

 “Feed makers are trying hard to cut costs as they can hardly raise prices, while grain prices are rising,” Kim said.

The import cost for corn was about $63 a ton higher than wheat in April, compared with about $25 a year earlier, Kim said.

Corn futures were little changed at $7.535 a bushel at 11:38 a.m. Seoul time on the Chicago Board of Trade, while wheat was also little changed at $8.035 a bushel. Corn has advanced about 20% this year, while wheat rose 1%.

“Corn prices may remain strong as there’s always a risk of adverse weather and high oil prices support demand for ethanol, while demand from emerging markets keeps on growing,” said Park Jong Beom, a trader at Tong Yang Securities Inc. in Seoul.

South Korea’s corn imports will drop to 8 million tons in the year that ends Sept. 30, down from 8.46 million a year earlier, the U.S. Department of Agriculture’s Foreign Agricultural Service said in a report on May 4. Wheat imports will slide to 4 million tons in the year ended June 30, compared with 4.362 million a year earlier, the USDA unit said.

South Korea, Asia’s second-biggest grain buyer, imported 6.54 million tons of feed-corn last year, representing about 76% of total corn imports, data on the website of the Korea International Trade Association showed. Feed-wheat imports stood at 2.23 million tons, or about half its total wheat imports.

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