June 15, 2007

US beef imports flatten South Korean cattle prices 

For the first time in eight years, prices of South Korean cattle fell below that of bulls in anticipation of the influx of more US beef with the recently signed Free Trade Agreement (FTA) between US and South Korea. 

According to the National Agricultural Cooperative Federation, the average price of one Korean bull (weighing 600 kilograms) was 4.758 million won (US$5,110) as of June 5; 2,000 won more expensive than a cattle. Two days later, the price gap widened to 12,000 won.

Under the FTA, South Korea will be forced to fully open its market on US beef which is seen to impact local beef production. Canada's likely beef shipments to South Korea will have declining prices continue for the time being.

Prices of cows were higher than oxen as cows can have calves, according to traders, but its recent decline is a cause of worry said Kim Seong-ho, an official of a local cattle federation.

US beef has already hit the local market with imports hitting 248 tonnes since April. Of the total, 51.2 tonnes of meat were returned or destroyed due to their failure to pass local quarantine standards, with 97 tonnes are still under inspection. The remaining 85.3 tonnes are already distributed.

Korean experts say US beef imports is seen to rapidly rise after accepting the "lenient excuse" of Washington a "mistake" has occurred in exporting beef with bones which is meant for domestic use. A ban will unlikely happen with this kind of relaxed action, they said.

A local beef importer said imports of US beef will increase by 7,000 to 8,000 tonnes per month and will rise further if quarantine standards are revised in "favour of US beef".

Canada, which is in negotiations with South Korea on an FTA, has also made an official request for beef market opening.  Canadian beef, which South Korea banned in 2003 also due to mad cow disease, is slowly moving after receiving a "mad cow disease controlled country" from the International Animal Health Organization last May.