Corn demand in South Korea expected to take an upturn

Corn demand in South Korea may climb as much as 6% after a surge in sugar prices earlier this year spurred a shift to the grain as a sweetener.

Consumption may increase to as much as 8.8 million tonnes this year from 8.3 million tonnes in 2009, Sung J. Park, executive vice president at CJ CheilJedang Corp. said. Corn demand for food use may jump 26%, while raw sugar consumption may drop 6%.

Corn in Chicago has tumbled 14% this year on forecasts for increasing output from Argentina and Brazil. Sugar reached a 29-year high of 30.4 cents per pound on February 1. Prices have since fallen 54%, partly on bets that higher output in India and Brazil will curb a supply deficit.

"Raw sugar futures have come down sharply this year, but spot prices are still pretty high from a year ago," said J.H. Song, general manager in CJ CheilJedang's grain and sugar purchasing strategy team. Korean importers normally secure import contracts about four months before delivery and have already covered almost 70% of annual needs, he said.

The nation's corn imports may climb 6.4% to 8.3 million tonnes in the marketing year that begins October 1, a unit of the US Department of Agriculture said in a report on May 6.

Demand for food corn, used to make high-fructose syrup and starch for beverages and ice creams, may increase to as much as 1.9 million tonnes, while feed-corn may rise only 1% to 6.9 million tonnes, CJ's Park said.

An outbreak of foot-and-mouth disease in the country could curb demand for feed corn if the animal illness expands and cuts meat consumption, Park said. The virus may spread nationwide after new cases of the disease were found, the Korean government said April 22.