December 5, 2007

 

South Korea wants more corn, even after 1.5 million-tonne buying spree

 

 

Even after a 1.5 million-tonne buying spree for corn, South Korean feed makers are hungry for more, traders said.

 

South Korea was the biggest buyer in the global corn market last month, most of the supplies coming from the US.

 

In the first 10 months of the year, the country imported 5.7 million tonnes, according to the Korea Trade Information Services.

 

Rising freight rates and soaring US corn futures, which were up 17 percent since late June, are sending South Korean traders scurrying for more corn supplies.

 

Strong demand from the food and fuel sectors and a weak dollar have also added to the impetus to import.

 

Buyers want to lock in corn supplies further ahead than normal, an official at a trading house said. Traders are likely to seek corn up until June arrivals, before demand starts slowing early next year, an official said.

 

Nonghyup Feed, South Korea's largest feed maker expects corn prices to continue rising for the first half of 2008.

 

Asia's insatiable appetite for raw materials, coupled with transport bottlenecks in producer countries such as Brazil and Australia, are leading to record freight rates - spot voyage fixtures for panamax rates for the US Gulf to South Korea route have now more than doubled to US$120 per tonne from US$55 per tonne early this year.

 

This has in turn pushed up costs of imported corn up 35 percent from last year's figures, leaving feed makers struggling to keep up with price increases.

 

Although South Korean feed makers to raise prices thrice this year, it was seemingly not enough. Another price hike is expected in December.