USDA GAIN: Oilseeds, Cotton, Sugar, Grain and Feed
09 March 2012
USDA GAIN: Korea Oilseeds & Products Annual 2012
Soybean consumption in MY 2012/13 is forecast to remain steady at 1.3 million MT, of which 920,000
MT will go for crushing and 370,000 MT for food processing. MY 2012/13 soybean meal consumption
is projected to expand 50,000 MT to 2.35 million MT as the local hog industry recovers from the effects
from the earlier Foot & Mouth Disease (FMD) outbreaks. Imports of U.S. soybean meal are expected
to double during this period to 200,000 MT. Meanwhile, soybean oil consumption in MY 2012/13 is
forecast to grow 9 percent to 500,000 MT because of rising bio-diesel demand.Oilseed, Soybean
Production:
Soybeans account for about 70 percent of Korea’s total oilseed production, while sesame and perilla
combined make-up about 25 percent of the total. The remainder largely consists of rapeseed and
peanuts.
The Korean Rural Economic Institute’s (KREI) conducted a nationwide planting intention survey of 649
soybean farmers from December 27, 2011-January 5, 2012. According to the survey results, MY
2012/13 soybean area is forecast to slightly decline to 77,234 hectares, down 615 hectares or 1 percent
from the previous year’s actual plantings. This decline is in part due to strong domestic rice prices that
are expected to cause some farmers who planted soybeans last year to switch back to rice. Using the
KREI survey results as a benchmark, Post is forecasting MY 2012/13 soybean production to remain
relatively unchanged from the previous year at 129,000 MT.
In MY 2011/12, soybean production climbed to 129,394 MT, up 24,040 MT or 23 percent from the
previous year because of the increased plantings and favorable weather conditions late in the growing
season. The increase in production has put downward pressure on local soybean prices since last fall.
See price series table below.
In the future, soybean production is expected to hinge on the direction of the government’s rice
reduction policy.
In 2010, the government instituted a 3-year pilot rice reduction program (2011-13) to reduce the
country’s oversupply of domestic rice by cutting annual production by 200,000 MT (40,000 HA).
Under this program, farmers will be paid 3 million won ($2,600)
per hectare for planting soybeans and
other crops instead of rice. These farmers will also continue to receive the 700,000 won ($632) per
hectare rice area payment. Of note, soybeans are considered the most suitable crop to grow in
converted paddy lands and farmers.
In CY2011, government soybean purchases, which are made each year at a fixed price, stayed at zero
for the second year in a row as farmers opted to sell their beans into commercial channels at higher
prices. The government rate, which is unchanged since 2009, was set at 3,168 w/kg ($2.86), while the
average wholesale soybean price during this period (Oct-Dec) was 5,700 w/kg ($5.15). The government
has not hit its annual purchase target of 14,100 MT in years past since domestic prices have been so
strong.
Consumption:
Soybeans account for the majority of oilseed consumption. Consumption in MY 2012/13 is forecast to remain unchanged from the current marketing year at 1.3 million MT, of which 920,000 MT will go for crushing and 370,000 MT for food processing use in items like tofu, soymilk and soy sauce. Future growth in overall soybean consumption is expected to be minimal given the maturity of the crushing and soy processing industries.
Meal, Soybean
Meal, Rapeseed
Production:
Almost all of the vegetable meal produced in Korea is made from imported soybeans. There is also a
very small amount (<1,000 MT) of locally produced rapeseed meal.
MY 2012/13 demand for crushing soybeans will remain flat at 920,000 MT as crushing margins remain
tight and demand steady. Demand is slightly below the country’s 1.0 million MT crushing capacity.
Soybean meal production for MY 2012/13 is likewise forecast to hold steady at 730,000 MT with an
extraction rate of 79.2 percent and crude protein content of 44 percent.
There are only two soybean crushers: CJ Corporation and Sajo O&F Co Ltd. In an effort to strengthen
their competitiveness against imported meal from South America and India, these companies have
started producing dehulled Hi-pro soybean meal with 47.0 percent protein content by blending U.S. and
Brazilian meal. In CY 2011, production of dehulled Hi-pro soybean meal with 47 percent protein was
up slightly, accounting for 23 percent of total soy meal production. Local crushers plan to expand
dehulled hi-pro production in the future.
The breakdown of production by company and product follows. In CY 2011, CJ produced 47 percent
protein dehulled meal and 45% protein meal in a ratio of 35:65, while Sajo produced 46 percent and 45
percent protein meal at a ratio of 50:50.
Consumption:
Nearly all imported and domestically produced soybean meal is used in compound feed production.
Korean feed millers prefer soybean meal since it is more readily available than other oil meals. After
corn and feed wheat, soybean meal is the third most widely used ingredient in compound feed
production, accounting for about 12 percent of the total. While there is room to increase the soybean
meal inclusion rate in animal feed rations, overall usage is expected to stay relatively flat for the
foreseeable future given rising competition from alternative proteins, such as DDGS, and palm kernel
and copra meals.
MY 2012/13 soybean meal consumption is forecast to increase 50,000 MT to 2.35 million MT as the
local hog industry gradually recovers from the effects of the Foot & Mouth Disease (FMD) outbreaks in
late 2010 and early 2011. Similarly, MY2011/12 soybean meal consumption is predicted to increase
70,000 MT to 2.3 million MT as the livestock sector continues to rebuild after the FMD crisis.
The U.S market share of total soybean meal consumption is calculated at about 20 percent; this figure is
based on the volume of meal produced from U.S. soybeans plus the amount of imported U.S. meal.
U.S. market share is expected to increase in the future as the U.S. soybean industry continues to work
with the local compound feed industry highlighting the benefits of U.S.de-hulled hi-pro meal. In fact, 34
feed mills used U.S. dehulled hi-pro meal in CY 2011. One constraint to future growth, though, is
price. U.S. dehulled hi-pro soybean meal is about $10 per MT more expensive than South American
meal.
Rapeseed meal consumption for MY 2012/13 is forecast to stay around 300,000 MT. MY2011/12
consumption is expected to increase 15,000 MT to 300,000 MT as the livestock industry continues to
recover from FMD. Sizeable volumes of imported copra and palm kernel meals are also used in
compound feed production depending on the size of import volume.
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