Special Edition: Asian Pacific Feed Developments

South Korean government rice decision will impact feed wheat imports: USDA

By Aerin Einstein-Curtis

- Last updated on GMT

© iStock/Gil-Design
© iStock/Gil-Design

Related tags Compound feed production Maize Usda

Despite an upturn in rice feeding in South Korea, US feed corn imports are expected to stay steady for that Asian country, says the USDA.

In a report​ published by the US Department of Agriculture’s (USDA) Foreign Agricultural Service last week, officials said an increase in the use of feed rice in South Korea is expected to limit the call for feed wheat, although not feed corn.

“The government of Korea has approved the use of 470,000 metric tons (MT) (milled basis) of rice stocks for feed use in calendar year (CY) 2017, a quantity more than five times larger than in CY 2016,”​ the USDA reported. “This policy will have the effect of increasing rice prices and depleting old and deteriorating stocks, but it will also lead to a decrease in the overall demand for other feed grains.”

Rice changes

The shift in feed grain use there is anticipated to influence wheat imports.

“Feed producers are expected to use a lower quantity of feed grade wheat in marketing year (MY) 2016/17, as an additional quantity of rice is added to the blend of feed grains,”​ wrote the USDA authors.

The move was predicated by “higher than average”​ yield in the rice crop for several years, they said. Additionally, there are efforts to reduce harvested area and promote alternative crop growth.

Feed wheat market

“Due to the relative price competitiveness of feed grade corn over feed grade wheat, Post forecasts lower consumption and imports for feed grade wheat in MY 2016/17 relative to previous projections,” ​said the USDA team. “Meanwhile, the projections for consumption and corn imports in MY 2016/17 remain unchanged.”

Feed grade wheat has been less price competitive than feed grade corn since November 2016, leading to fewer new contracts for wheat, wrote the US agency.

“The price disparity between these 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,” ​noted the USDA report. “As of early January 2017, Korean feed millers have completed contracts for delivery of feed grade wheat for the first nine months of MY 2016/2017 (July/June) of approximately 1.5m MT.”

Compound feed production 

Meanwhile, MY 2016/17 compound feed production in South Korea is revised down by 400,000 MT from the initial forecast to 19M MT, after a recent recurrence of Highly Pathogenic Avian Influenza (HPAI) sharply cut the total poultry inventory by around 19%.  

Compound feed production for MY 2015/16 was recorded at 19.4m MT, 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, said the US agency.

Feed corn was the primary ingredient used in poultry and swine compound feed, accounting for about 40% of total ingredients.  This number is down about two percentage points from the previous year, with an increasing proportion of feed wheat used, noted the officials. 

Corn consumption for MY 2016/17 remains unchanged from the previous forecast of 9.9m MT, consisting of 7.6m MT for feed and 2.3m MT for food, seed and industrial (FSI) purposes.  The demand for corn used for compound feed production will remain unchanged at 7.6m MT, reported the US agency.   

Corn imports are predicted to reach 9.8m MT,  a drop of 3% from the previous year, wrote the authors. “The MY 2016/17 forecast for US corn exports to Korea remain unchanged from Post’s previous forecast at 3m tons, expecting a greater supply of competitively priced corn originating from both South America and the Black Sea region,”​ they added.

Related news

Show more