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This policy will have the effect of increasing rice prices and depleting old and deteriorating stocks, but it also will lead to a decrease in the overall demand for other feed grains. Due to the relative price competitiveness of feed grade corn over feed grade wheat, the FAS forecasts lower consumption and imports for feed grade wheat in market year 2016-17. Wheat consumption is revised down to 4.4 million tonnes from the previous estimate of 5 million tonnes, as feed grade wheat has been less price competitive than feed grade corn, leading to fewer new contracts for wheat.
Wheat import forecast also is revised down to 4.6 million tonnes from 5.1 million tonnes competitiveness of feed grade wheat relative to feed grade corn. According to the FAS, price disparity between the commodities has widened since November 2016, which is expected to reduce the number of upcoming contracts for feed wheat in the remainder of the marketing year. Meanwhile, the forecast of wheat imported for milling purposes (including flour and pasta imports on a wheat equivalent basis) remains at 2.6 million tonnes.
According to the FAS, South Korea’s corn consumption for market year 2016-17 is forecast to be 9.9 million tonnes, consisting of 7.6 million tonnes for feed and 2.3 million tonnes for food, seed and industrial (FSI) purposes. The demand for corn used for compound feed production remains unchanged at 7.6 million tonnes.
The country’s compound feed production for market year 2016-17 is revised down by 400,000 tonnes from the initial forecast to 19 million tonnes, after a recent recurrence of
Compound feed production for market year 2015-16 was recorded at 19.4 million tonnes, up about 2% from the year earlier mainly due to continuing growth in poultry, swine and other livestock sectors, partly offsetting reduced demand from both beef and dairy cattle operations. Feed corn was the primary ingredient used in poultry and swine compound feed, accounting for about 40% of total ingredients. According to the FAS, this number is down about two percentage points from the previous year, with an increasing proportion of feed wheat used.
South Korea’s consumption of processing corn increased by 5% in market year 2015-16, to more than 2.2 million tonnes from 2.1 million tonnes in market year 2014-15. Wet millers consumed almost 97% of total processing corn, with the remainder going to dry millers, the report said. Major corn processors have continued using conventional corn imported from Brazil, Russia, Hungary, Australia and France. Meanwhile, they are sourcing non-GM corn from the United States and Argentina for food purposes. Many Korean food processing companies are reluctant to use ingredients sourced from biotech corn.