Agro Perspectiva

Corn Demand by South Korea May Climb 5% on Recovery

29.06.2010 11:43 "Agro Perspectiva" (Kyiv) — Feed-corn demand in South Korea, the world’s third-biggest corn buyer, may advance 5 percent this year as the recovering economy boosts meat consumption, spurring demand for livestock feed, Nonghyup Feed Inc. said. Corn consumption for use in domestic feed is forecast to climb by 300,000 to 400,000 metric tons to about 6.3 million tons this year, Lee Young Il, general manager for the foreign trade team, said in an interview in Seoul yesterday. Futures have dropped 12 percent this year on speculation that warm, wet weather would boost production in the U.S., the world’s biggest exporter. «Demand has increased because the economic environment is good,» Lee said. «Cattle and cow breeding rose a lot and farmers are raising more poultry too.» South Korea, Asia’s fourth-biggest economy, yesterday raised its growth forecast for this year to 5.8 percent, from the 5 percent projected in December, saying the faster-than- expected global recovery has spurred exports and domestic demand. Production of compound feed for livestock, which uses grains including corn as ingredients, may increase about 5 percent to more than 16 million tons this year, Lee said. Beef cattle breeding increased 9 percent from a year earlier to 2.7 million heads in the first quarter, while pig and chicken breeding rose 4 percent, data on the website of the Korea Meat Trade Association show. Corn Needs The Asian nation, which imports 99 percent of its corn needs, last year bought from overseas a total of 7.3 million tons of corn including both feed and food use, according to data from the Korea International Trade Association. Import prices for shipments contracted up to October averaged about $220 a ton on a cost-and-freight basis, lower than his forecast of $225 a ton, Lee said. Prices may decline further on expectations for a bumper crop in the U.S. and falling freight prices, he said. The U. S. crop is forecast to expand to a record 339.6 million tons in the 2010–11 marketing year, from 333 million tons a year earlier, according to the U. S. Department of Agriculture. That will push global stockpiles to 147.3 million tons at the end of the season from 143.4 million a year ago, it said June 10. Still, China’s buying remains a potential trigger for prices to gain, Lee said. China, the world’s most populous nation, has bought at least 885,000 tons of corn for delivery by Aug. 31, according to USDA data. China may buy more than 1 million tons in the next 18 months, on top of what has already been purchased, Thomas Dorr, president of the U. S. Grains Council said June 16. «We are very closely watching China,» he said. «If China increases imports, that may swing the market.» Lee didn’t give his projection for South Korea’s feed-corn demand next year as uncertainties over the economic recovery remain because of China’s tightening and Europe’s debt crisis. «Demand for livestock products is very sensitive to household incomes,» he said. «Still, some experts are doubtful about the growth picture.»