May 26, 2011

 

South Korea turns to South Africa for corn

 

 

South Korea, the biggest corn importer in Asia after Japan, is buying more from South Africa after US prices doubled in the past year.

 

The country imported 401,070 tonnes of South African corn for livestock feed in the first four months, data from the Korea International Trade Association showed. That compares with the 208,866 tonnes shipped in all of 2010.

 

Corn in CBOT climbed in April to the highest level since the global food crisis in 2008 as demand for feed and ethanol outpaced production. That helped push world food costs to a record in February, the UN estimates, spurring conflict and riots in North Africa and the Middle East, and driving 44 million people into poverty. Rabobank International says US predictions for the corn harvest this year are optimistic because of poor weather and planting conditions.

 

"Importers purchased South African corn because it was more competitive than US grain in terms of price," said Lee Young Il, a general manager at Nonghyup Feed Inc., the biggest feed-grain buyer. The US is the world's biggest producer and exporter.

 

Corn from South Africa was about US$5-US$10 per tonne cheaper than the US variety earlier this year, Lee said, with the gap narrowing to about US$3 a tonne now.

 

Nonghyup bought two cargoes this year, Lee said. The Korea Feed Association, the largest grain-buying group, purchased 13 cargoes, or about 650,000 tonnes, since last year, according to data from the group.

 

Yellow-corn exports from South Africa almost quadrupled to a 14-year high of 1.02 million tonnes in the year ended April 30 from 261,608 tonnes in the year-ago, data on the South African Grain Information Service's website showed on May 4.

 

"We'd like to increase corn purchases from South Africa as long as price gaps remain around the US$5 to US$10 level as feed makers try to buy cheaper alternatives to expensive US corn," said Kim Chi Young, director for Korea Feed's grain purchases.

 

The nation imported 6.53 million tonnes of feed-corn last year, of which about 92% was sourced from the US, according to data from the trade association. There were no purchases from South Africa in 2009.

 

Corn production in South Africa may climb to 12.3 million tonnes in the year that began May 1, up from 11.4 million tonnes a year earlier, the Foreign Agricultural Service of the USDA said in a report on May 11. Exports will be unchanged at two million tonnes, it said.

 

Corn advanced 0.6% to US$7.3775 a bushel on CBOT.