South Korea buying U.S. feed

Jul 25, 2014
by DTN

— Imports up on corn, soy meal

The good news for U.S. corn exporters is bad news for wheat exporters everywhere: South Korean feed grain importers are returning to the U.S. corn this year due to lower prices, to the detriment of their overall wheat imports.

Corn importers don’t have to look far for supplies, either. With China’s hesitance to take U.S. corn, due to that country’s failure to approve corn with the MIR162, South Korea is enjoying the availability of Asia-bound freighters and lower prices. Imports of dried distillers grains with solubles (DDGS) also are doubling.

As for another important feed ingredient, soybean meal, imports are increasing overall, including meal from the U.S., with nary a cry over concerns for genetically engineered soybeans.

A dark cloud does loom. “I think compound feed production in 2014 will be stagnant because of a decline of poultry compound feed production” following poultry death due to avian influenza, Korea Feed Association (KFA) Purchasing Division Director Chi-Young Kim said.

But that’s after record compound feed production last year. KFA (which has 65 member-companies totaling 103 feed mills) figures show a production of 18,936 metric tons (mt) last year, a 2.5 percent increase from 18,480 in 2012. Leading the historical high, production for swine feed increased 7.9 percent, from 5,686 mt to 6,136 mt.

To make compound feed in 2013, feed millers used 6,775,800 tons of imported corn and 2,528,464 tons of imported wheat. They imported 6,819,632 tons of corn, 104,619 tons (1.53) percent of which came from the U.S., with South America and the Ukraine being the major providers. U.S. feed wheat was only a mere 0.17 percent (4,129 tons) of a total of 2,424,002 tons that also came from Canada, Europe, South America and India.

This year, millers are using more corn instead of wheat, as feed wheat prices have increased sharply to be higher than those for corn. “We will import more U.S. yellow corn than last year, as U.S. corn recovered its price competitive power,” Kim said.

U.S. Grains Council South Korea Director Byong-Ryol Min confirmed Kim’s analysis, noting that South Korea increased by 28 percent year-on-year its imports of corn to 3,550 tons in January-April on a customs clearance basis. Of the total, 2,687 tons (81 percent) went to feed use and 683 tons (19 percent) to food and industrial purposes.

And of total imports, 36 percent (1,278 tons) came from the U.S. “The whopping increase in corn arrival during the first four months of this year was ascribed primarily to the nation’s un scheduled purchase of the U.S. corn rejected by China because of MIR162,” Min said.

Things look brighter for DDGS too, particularly from the U.S. South Korea imported 232 tons of U.S. DDGS during the first four months of 2014 are up 105.3 percent year-on-year from 113 tons. The U.S. enjoyed a 91 percent share in South Korea’s DDGS January- April import market this year, compared with 86 percent during the same period last year.

“The C&F price of U.S. DDGS customs-cleared in April was $331.89 per metric ton, compared with that of feed corn ($237.37) and that of feed wheat ($293.99),” Min said.

South Korea imported 601,602 tons of soybean meal in January-April this year, a 14.19 percent increase from 526,826 tons during the same period last year. U.S. soybean meal imports went up 7.62 percent year-on-year during the same period, from 149,729 to 161,147 tons, show figures provided by U.S. Soybean Export Council Korea Director Say-Young Jo.

As for issues around genetically engineered traits, also known as GMO, Jo said South Korea has had a mandatory GE labeling for more than 10 years. “I do not think what is happening in China is adding concern over GMO safety to the Korean consumers,” Jo said. — Richard Smith, DTN Tokyo Correspondent