February 1, 2021

H5N8 bird flu outbreak in South Korea lowers demand for feed as corn prices surge

Market sources said South Korea's H5N8 bird flu outbreak has reduced demand for corn-based livestock feed during a time when corn prices have surged to record highs, S&P Global Platts reported.

South Korea's demand for corn imports has been lukewarm with feed millers unlikely to issue tenders for corn in the next few months as they are covered until June.

A South Korean poultry manager said their plant is badly affected by bird flu, with feed consumption expected to fall about 10,000 mt.

A trader said livestock feed consumption forecasts for Asia will be adjusted lower for 2021 because of bird flu.

23 million poultry have been culled in South Korea since the first outbreak was reported in November. 173 million broilers, layers, and ducks are raised in South Korea in the third quarter of last year, according to Statistics Korea.

Corn prices have surged to record highs because of the rally in corn futures. Prices have averaged US$285/mt at CFR Northeast Asia to date in January, a 9.5% increase from December and 33.8% up year-on-year, based on data by S&P Global Platts. Corn prices for CFR Northeast Asia reached US$286/mt on January 15, the highest since S&P Global Platts introduced the assessment in August 2016.

Chicago Board of Trade corn futures rose 20 cents after China's 1.36 million mt or 53.5 million bushel purchase of US corn on January 26, with China's subsequent 680 million mt purchase on January 27 maintaining the momentum.

- S&P Global Platts