South Korea may slash corn imports by about 1 million tonnes as feed producers shift to cheaper alternatives such as wheat, said an official from the US Grains Council (USGC) on Wednesday (Dec 3, 2008).
South Korea's corn imports for feed use in 2009 will be similar to this year's level at best, and are more likely to fall below the level, said Min Byong-ryol, South Korea's representative for the USGC.
Min said about 1 million tonnes of corn imports will be replaced by cheaper wheat from countries such as Ukraine, and overall imports of feed corn will be about 8 million tonnes, with some 7.5 million tonnes coming from the US.
South Korea imported 6.5 million tonnes of feed-grade corn for the first 10 months of 2008, with 95 percent or 6.2 million tonnes purchased from the US, up from 63 percent a year ago.
The sharp increase of US corn imports was due to China reducing its exports sharply in order to meet rising domestic consumption.
The ongoing credit crisis has also prompted South Korean buyers to switch to US grains, which are subsidised to promote exports of US agricultural products.
Prices of US corn fell 26 percent this year to US$3.31 per bushel, down from a record high of above US$7 this summer. Wheat prices dropped 42 percent this year to US$5.10 per bushel, due to prospects of record crop year.
Corn was supported by a tight stocks-to-use ratio, with growing corn demand from the fast-expanding US ethanol industry providing support.
US corn production is expected to fall as farmers are projected to switch some of their corn acreage to soy, which require less fertilisers.
Input costs have increased, and they are all fixed for next year, said Bill Olthoff, a member of the USGC.
Olthoff added that fertiliser costs have more than doubled from four years ago.
US corn cropland will decline to around 86 million acres next year from 94 million this year, as soy acres are likely to increase to 74 million from 65 million.