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USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed

09 November 2012

USDA GAIN: South Korea Grain and Feed Update November 2012USDA GAIN: South Korea Grain and Feed Update November 2012

Statistics Korea estimates 2012 rice production in Korea at - the lowest in 32 years - at 4.07 million metric tons (MMT). The estimate places Korean rice production down 3.5 percent from last year. While area was down about 0.5 percent, typhoons during the summer on the west coast rice growing regions and the resultant dry winds reduced yields by about 2.2 percent marking 2012 as the lowest production year since 1980. In MY 2011/12 U. S. corn exports to Korean declined sharply to 3.8 million tons or 49 percent of total corn imports as overall corn imports dropped 6 percent and Korean buyers turned to South America and Eastern Europe for both feed and food corn. T
USDA GAIN Report - Oilseeds, Cotton, Sugar, Grain and Feed


Rice, Milled

Author Defined:



The Korean government released official numbers of wheat area at 9,467 hectare (HA) in MY2012, down 27 percent from the previous year due to heavy rains in the planting season for October – November 2011. Post estimates the decreased area to result in declining wheat production to 32,000 metric tons (MT) based on five-year-average yield. Official statistics of wheat production will be released in early spring next year.


MY 2012/13 wheat consumption is revised to 4.6 million tons from the previous forecast, down 300,000 MT due to lower feed wheat use for animal compound feed as feed grade wheat prices are less competitive with corn. Milling wheat consumption is unchanged from the previous year.

Wheat Trade:

MY 2012/13 wheat imports are expected to decline to 4.4 million tons, down 200,000 tons from the July forecast, of which 2.4 million tons are for milling (including flour and pasta imports on a wheat equivalent basis) and 2 million tons for feed.

According to trade and sales contract data of Indian origin and optional origin, more than 1.7 million tons have been contracted with delivery for the first seven months in MY2012/13. International traders expect Korea to import in the range of 2.0 million tons of feed wheat up to 2.5 million tons mainly from India followed by Canada, Australia and USA. Imports of U.S. wheat in MY 2012/13 are expected to be 1.6 million tons, consisting of 1.3 million tons for milling and 0.3 million tons of feed grade wheat.



Corn production is negligible, accounting for less than one percent of total consumption. Statistics Korea (KOSTAT) recently released data on planting area at 17,000 hectares, up seven percent due to increased local corn prices. Therefore Post estimates Korea’s corn production at about 84,000 metric tons based on the preceding five-year average yield. The government will release the 2012 official production figures in March 2013.


MY 2012/13 corn consumption forecast is revised to 8.7 million MT, up 0.6 million MT from the previous forecast due to greater demand for feed corn due to the lack of supply of feed grade wheat. Food, seed, and industrial (FSI) corn consumption forecast remains around 2.1 million tons unchanged from the previous forecast due to stable demand for processed corn products.

On the basis of the first ten months in MY 2011/12, compound feed production is estimated to reach 18 million tons in MY 2011/12, up 6 percent from the previous year and maintain the similar level in MY 2012/13 due to strong animal inventories following recovery of swine inventories in the past two years after the FMD outbreak. Feed corn had been the main ingredient used in compound feed accounting for 35 to 40 percent of total ingredients. However, corn utilization rate in total compound feed production has gradually fallen to 32 percent since 2008/09 due to rising feed wheat use. In MY 2012/13, post estimates corn utilization at the range of 35 - 40 percent of total ingredients. This ratio is projected to remain relatively constant for the foreseeable future based on the preferences of local animal growers.

Major corn processors have continued using traditional corn imported from Serbia, Ukraine, Hungary and Brazil for food. On the other hand, for industrial purposes GM corn imported from the United States is primarily used. Many food processing companies have been reluctant to use ingredients sourced from biotech corn.

MY 2011/12 total corn consumption reached 7.8 million tons, down about 5 percent from the previous year due mainly to the sharp increase of feed grade wheat use in compound feed. FSI corn consumption stayed around 2.1 million tons, remaining unchanged from the previous year due to maintaining a constant demand for high fructose corn syrup (HFCS) replacing sugar demand in the soft drink industry during the marketing year.


MY 2012/13 corn import forecast is revised to 8.6 million MT, up 600,000 tons from post’s July forecast due to increased feed corn imports as feed grade wheat imports are expected to be down 15-30 percent since the prices of feed grade wheat have been less competitive than corn prices recently.

MY 2012/13 U.S. corn imports are revised down to 1.5 million tons, sharply declining from the July forecast of 5.5 million MT due to the U.S. drought. U.S. corn will be replaced by South American origins.

As of the middle of October 2012, importers have contracted 3.3 million tons of corn for October 2012 to March 2013 deliveries. Most of the contracted purchases for feed corn to date are optional origin at seller’s option among the United States, South America or Europe with a price range of $255-340 per metric ton CNF while corn processors have contracted for No. 2 GM/non-GM yellow corn from the United States or South America at seller’s option and conventional corn from Eastern Europe or South America at seller’s option with a price range of $260-400 per metric ton CNF.

Corn imports for MY 2011/12 increased to 7.6 million tons, up 0.1 million tons from Post’s July estimate, but 0.5 million tons lower than the previous year as feed grade wheat was much more competitive than feed corn price in the marketing year. U. S. corn exports to Korean have sharply declined to 3.8 million tons or 49 percent of total corn imports with Korean buyers diversifying supply resources into South America and Eastern Europe for both feed and food corn.



Statistics Korea (KOSTAT) released the 2012 rice production estimate of 4.07 million metric tons (MMT) based on a nationwide survey of 7,000 rice standard fields conducted from September 15 to 21, 2012. The estimate places Korean rice production for 2012 at its lowest since 1980 and down 3.5 percent (150,000 tons) from last year.

The survey results show total harvested acreage at 849,172 HA, which is a 0.5 percent decline from the previous year, down 2 percent from post’s previous estimated acreage. Furthermore, anticipated lower yields due to three strong typhoons in late August – September during the critical period of filling stage resulted in the lowest production since 1980. Typhoons during the summer hit Korean rice fields on the west coast and the resulting dry winds left empty kernels in many paddies. The damaged area reached 110,000 hectare or 13 % of total paddy area. Considering the current favorable weather conditions after the government crop survey, Post’s estimate of 2012 rice production is 4.1 million metric tons (MMT). KOSTAT will release its final production estimate shortly after the rice harvest is completed in mid-November.


Rice area continues to decrease annually – by from 5,000 HA to 38,000 HA every year since 2001. Area decrease in 2012 was relatively lower than other years in response to a higher farm gate price since last fall. The majority of rice farmers who participated in the rice reduction program last year have returned to rice cultivation from alternative crops in their paddy fields. The completion of the Four River Projects added some area in the rivers basin into the total rice planting acreage.


Korea experienced severe unfavorable weather spells in tandem with two strong typhoons since late August. The weather damage affected the rice crop which was in the early filling stage of rice kernel formation soon after pollination. Hot and dry winds along with typhoons left many rice kernels empty. Therefore, rice yield based on government survey turned out to be 4,810 kg per HA, down 3 percent from the previous year.

Government Rice Purchase Program under the Public Rice Stockholding Program (PRSP)

The government also purchases rice for price stabilization purposes. Under the Public Rice Stockholding Program (PRSP) for food security, the Korean government will purchase domestic paddy rice during the harvest season (October-December) at the average market price and sell it during the non-harvest periods at the prevailing domestic market price. Between October and December 2012, the Korean government plans to purchase 370,000 MT (milled basis) of paddy rice representing 9 percent of the 2012 rice crop estimate.

Government and NACF’s Loan Programs

The Korean government plans to provide loans for rice milling worth 1.2 trillion Korean Won (US$1.08 billion) with a special loan rate between 0 and 2 percent per annum this year. The National Agricultural Cooperative Federation (NACF), the national farmers group, also continues providing loans to rice farmers/millers worth 1.4 trillion Korean Won (US$1.26 billion). The main goal of the loan program is to encourage rice millers to purchase more rice from farmers minimizing harvest pressures in the rice market.

Rice farmers are expected to sell approximately 2 million metric tons during the harvest season including 370,000 MT of government direct purchasing under the PRSP program and 1.6 million metric tons of rice under the loan programs that include independent RPC purchases.

Most of the rice purchases under the loan programs provided by the Korean government and the NACF will be released into the rice retail market through NACF’s Rice Processing Complexes (RPCs) and independent RPCs throughout the 2012/13 (Nov/Oct) rice marketing year. Korean rice farmers are expecting the purchasing measures to help prop up prices during the rice harvest season.


Korea’s rice consumption pattern remains unchanged from the previous forecast.


MY 2012/13 ending stocks (at the end of October 2013) are forecast to decrease to about 0.5 million tons from the previous report or 11 percent of total consumption as 2012 domestic rice production is expected to decrease by 150,000 MT due to unfavorable weather during the summer.

MY 2011/12 ending stocks are expected to decrease to 0.6 million tons, down 27 percent from the previous estimate due mainly to lower imports of 2012 MMA than the government anticipated due to slowness of buying contracts. Accordingly, stock to use ratio declined to 13 percent from the previous 18 percent.


In MY 2011/12, rice imports revised down to 360,000 metric tons, down 240,000 metric tons from the previous estimate as Korea has failed to complete the purchase of 2012 MMA which shall be delivered within the corresponding calendar year because of higher bidding prices than expected in the tendering process since February 2012. Korea has tried to catch up the historically belated commitment of the MMA agreement. Accordingly, rice imports forecast in MY 2012/13 are revised to 600,000 metric tons, up 200,000 metric tons from the previous forecast as the Korean government is expected to try to deliver the 2013 MMA commitment within the corresponding calendar year.

The aT, the government’s state trading arm, manages the purchasing of all imported rice through a tendering process and auctioning of imported table rice.

2012 MMA Tendering Process:

Korea’s purchasing plan is 368,006 MT under the 2012 MMA. As of October 26, 2012, aT purchased 159,881 metric tons (milled), about 43 percent of the entire 2012 MMA import commitment with the remainder still being processed for buying tenders.

The United States was awarded 70,876 metric tons (milled) comprised of 34,244 metric tons (30,820 metric tons on milled basis) of brown medium grain rice for processing purpose and 40,056 metric tons of milled medium grain rice for table purpose worth approximately US$54 million. Post expects the United States to sell medium grain rice of about 100,000 metric tons (milled) under the 2012 MMA if an exporter makes a contract for about 30,000 metric tons of medium grain under the MFN quota in the ongoing biddings.


The aT has sold table rice shipments to Korean wholesale and retails rice markets through its public auction system since 2006. On the other hand, the Ministry of Food, Agriculture, Forestry, and Fisheries (MIFAFF) has distributed processing rice to end-users such as food processors and alcoholic beverage producers at a set price throughout the year since 1996.

The 2011 MMA shipments have arrived from late 2011 until June 2012. Approximately 104,297 MT of table rice has been delivered over this period. The aT kicked off table rice auctions for U.S. rice in December 2011 and sold out by the middle of August 2012 with other origins still ongoing auctioned-off. Thai rice started selling auctions on February 2012 and Chinese rice on March 2012, respectively, under 2011 MMA. Average auctioned prices for both U.S. #1 and Chinese #1 were lower than #3 which belatedly started their selling auctions when domestic rice markets went into upward trends on May 2012.

In response to much more favorable consumer confidence in U.S. medium milled rice, aT has continued selling U.S. medium rice for both #1 and #3 under 2012 MMA quota of which the first batch of 20,000 metric tons was delivered to Korea in the first half of 2012 soon after completing the selling auctions of U.S. table rice under 2011 MMA quota in the middle of August 2012.

November 2012

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