October 16, 2008

South Korea's top food processing firm CJ Cheiljedang said it would keep grain imports to a minimum, as a weaker won currency inflates purchase prices.

South Korea, which imports almost all its grain needs except rice, has seen food prices soaring this year as prices of wheat, soy and corn jumped to record highs on supply worries, although they have turned lower in recent months on prospects of the global financial crisis weakening commodities demand.

But the depreciation of the won currency, already one of the world's worst performers, has nearly offset the impact of falling grain and freight costs, keeping domestic food prices high.

Spokesman Min Tae-jung said they plan to put off purchasing grains in large quantities and will keep inventories low until the foreign exchange rates stabilise, as the won has fallen more than 30 percent this year, increasing import costs.

CJ, South Korea's top seller of wheat flour and sugar products, imports around US$1 billion worth of grains like wheat and soy annually.

A trader, however, said it was not planning to reduce grain imports as delaying purchases due to the current exchange rate would provide little help to its future dollar payments, which are usually settled three or six months after a contract is signed.