February 16, 2011

 

South Korea's 2011 feed output seen down to 30%

 

 

South Korea's feed output is projected to drop by a maximum 30% this year from last year's 17.5 million tonnes amid its battle on its worst-ever FMD outbreaks, a Nonghyup Feed official said Tuesday (Feb 15).

 

Nationwide cases of FMD have forced Asia's fourth-largest economy to cull nearly a third of its hog population to stop the spread of the disease among livestock, with 146 cases confirmed in nine provinces in less than three months.

 

"Massive slaughters (due to foot and mouth) will remove 2.2 million tonnes of feed demand and demand is seen to drop further as livestock will be slaughtered for meat if bans on their transfer are lifted," said Lee Young-il, general manager in charge of grain imports at South Korea's largest feedmaker.

 

Lee said feed production by the non-profit cooperative was expected to fall by less than 10% this year from last year's 5.5 million tonnes, which would lower its imports of soymeal by 17% to 250,000 tonnes this year.

 

The feedmaker's annual imports of two million tonnes of corn and 300,000 tonnes of feed wheat, however, are expected to remain unaffected as the grains are used mainly in compound feed for cattle, which accounts for 56% of Nonghyup's feed production, Lee noted.

 

Nonghyup in a long-awaited tender last week bought 55,000 tonnes of optional-origin corn at about US$1.69 over CBOT May futures, including cost and freight, and 55,000 tonnes of Canadian feed wheat at about US$305 per tonne, including cost and freight, both for May arrival.

 

Lee said almost all feedmakers in South Korea, the world's No.3 corn importer, needed to import corn for June arrival but were hesitating as it was unclear when and how much grain inventories would be consumed after the slaughter.

 

Among a combined of 3.3 million livestock culled as of Tuesday (Feb 15), hogs accounted for 3.2 million and cattle 150,726, the agriculture ministry said.

 

Nonghyup Feed accounts for an estimated 31% of the country's feed market.

 

Asked if Nonghyup, which lowered its prices of compound feed by 5% last August, would raise prices soon, Lee said it was possible if private feedmakers did so but that any hikes would be "minimal."

 

Despite globally bullish commodities prices, the South Korean government has been calling for private firms to refrain from raising product prices to contain inflation, with annual producer inflation hitting a 26-month high in January.