March 16, 2012

 

South Korea's feed wheat imports hit 2.2 million tonnes

 

 

Over the last two years, South Korea's annual feed wheat imports have hit 2.2 million tonnes, near a record, and are pressing at the limits of the country's requirements, a wheat analyst said Thursday (Mar 15).

 

"Feed wheat imports may not exceed current levels significantly because there is a limit beyond which it can't replace corn in animal feed," Nakki Sung, who analyses wheat purchases at food processing company CJ, said at an international grain conference here.

 

Feed millers prefer to use more wheat due to high corn prices, which are at a premium to wheat on the Chicago Board of Trade. Some importers in South Korea said annual feed wheat imports were closer to 2.3 million tonnes.

 

South Korea purchases around seven Panamax feed wheat cargoes of 55,000 tonnes each every two months, a senior executive at a Seoul-based commodity trading company said.

 

South Korea is one of the world's largest feed grains importers due to its burgeoning meat demand, but purchases slowed last year due to a massive outbreak of foot-and-mouth disease.

 

According to industry estimates, South Korea's compound animal feed output fell by at least one million tonnes to 16.0-16.5 million tonnes in 2011 due to the outbreak that led to the culling of millions of poultry animals, hogs and cattle. Wheat and corn account for around 50% of animal feed.

 

South Korea's feed-grade corn imports declined 12% in 2011 to 5.7 million tonnes due to the culling of animals and record high prices, Sung said. Feed-grade corn imports have the potential to recover toward the 6.5-million-tonne levels of 2010 if prices decline, Sung said.

 

Near-month CBOT corn futures may decline in the next US marketing year starting September 1 to US$4.50-6.20 a bushel as demand to make ethanol has almost peaked and the next crop may be substantially higher than 2010-11, Dan Basse, president of Chicago-based consultancy, AgResource Co., said.

 

However, he cautioned that prices may rise in the near term to US$6.80-7.20 a bushel until end-August from US$6.65 now.

 

Sung pegged imports of main animal feed ingredients-wheat, corn, soymeal and DDGS--at 9.8 million tonnes in 2011, down 4% on year.

 

South Korea's direct livestock product imports exceeded one million tonnes for the first time ever in 2011, due to lower domestic production amid outbreaks, US Grains Council Country Director Byong Ryol Min said in a recent report.