South Korea looks to Kazakhstan for wheat

South Korean milling wheat buyers - major customers of US, Australian and Canadian wheat - are considering imports from Kazakhstan for the first time, according to industry sources.

 

However, imports of the grain from the Central Asian state are expected to be capped due to its poor quality and additional processing costs over other origins.

 

Industry and government sources said the import deal was likely to be concluded by the time Kazakhstan President Nursultan Nazarbayev visits South Korea between April 21 and 23.

 

Some sources said the process had been designed to help improve ties between Asia's fourth-largest economy, heavily dependent on energy imports and Kazakhstan, Central Asia's top oil producer and the world's No.1 uranium producer.

 

European traders said this month a South Korean buyer was in talks to purchase up to 300,000 tonnes of wheat from Kazakhstan, and a major South Korean conglomerate was believed to be seeking summer 2010 shipment.

 

In March, Deputy Prime Minister Umirzak Shukeyev said Central Asia's top grain producer planned to break into new markets by starting shipments to South Korea, as a 600,000-tonne contract was being drafted with a Korean firm.

 

Kazakhstan said at the time the deal could be finalised when the country's president visited South Korea this month.

 

"Since last month, we have been studying Kazakhstan wheat in an effort to diversify the import origins," a Seoul-based milling wheat buyer said, adding the request had been made via a wheat industry body from the ministry of foreign affairs and trade.

 

"I doubt we will import as much as 300,000 tonnes because of the grain's quality issues, including high moisture and alien substances found in the test lot, which will lower production yields and raise costs," said the source, who declined to be identified because of the sensitivity of the issues.

 

The foreign affairs ministry spokeswoman, however, denied the government had made such a request.

 

South Korea imported 1.9 million tonnes of milling wheat in 2009, industry data showed. Of the total, 99% came from the US, Australia and Canada, with the rest from Russia. For feed wheat, it imported 1.8 million tonnes last year, with 96% from Ukraine.