April 9, 2008

 

US corn sales to South Korea at breakneck speed

 

 

The pace of US feed corn sales to South Korea have spiked in recent months as local feed millers are anxious to lock in contract prices before prices climb any higher, the USDA said Tuesday.

 

In fact, the local feed industry has contracted for corn deliveries through August and has even started contracting for shipments in marketing year 2008/09, which is far in advance of the 3-month lead time in years past.

 

While the pace of sales has accelerated, the total volume of imported corn for 2007/08 (Sep-Oct) is not expected to climb above the previous estimate of 8.8 million tonnes.

 

The livestock industry's demand for corn-based compound feed is expected to remain fairly steady throughout the year since the forecasted increase in cattle inventories is expected to offset the anticipated reductions in swine and poultry production.

 

Meanwhile, the import estimate for US corn is revised upward to at least 7 million tonnes given China's decision to clamp down on exports to combat rising inflation.

 

If China's export controls remain in place throughout the rest of 2007/08, imports of US corn could reach possibly as high as 8.0 million tonnes.

 

The upward revision is supported by existing contract data, as well as USDA export sales reports.

 

The local trade is reporting 6.4 million outstanding contracts for January-September delivery, with 2.6 million tonnes for US origin corn.

 

Meanwhile, optional origin contracts for this same period total 3.6 million tonnes , at least 80 percent of which is expected to be sourced from the US.

 

Importers are about half-way through making purchases for September delivery, and are expected to purchase another 300,000 tonnes before closing out the marketing year.