Report Highlights:

Notable changes for MY 2015/16 include an increase in Korean wheat production to 36,000 MT and increased wheat consumption to 3.85 million tons. For corn, domestic production was increased to 82,008 MT in MY2014. The Minimum Market Access agreement (MMA) requires that Korea purchase 408,700 MT of milled rice from Most Favored Nation (MFN) countries at the duty level of 5 percent under the tariff rate quota (TRQ) regime. As of July 8, the aT has purchased 305,027 metric tons of brown rice for processing purposes, equivalent to 274,524 metric tons (milled), about 67 percent of the entire 2015 TRQ import commitment. The United States has sold 102,352 metric tons of medium grain brown rice (or 92,117 metric tons, milled), 23 percent of the 2015 TRQ. The Korean government is expected to continue purchases of the remaining 134,176 metric tons (milled) within calendar year 2015.

Wheat

Production:

The Korean government recently released official numbers for wheat production at 23,409 MT in MY2014, down 14 percent from the previous year.

According to a governmental acreage survey conducted from May 16-30, 2015, the area of wheat cultivated in 2015 sharply increased to 10,076 hectares, up 40.3 percent or 2,896 hectares from the previous year due to a greater demand from wheat flour processors, who have made farm contracts with local wheat cooperatives representing wheat farmers. Accordingly, FAS/Seoul revised local production to 36,000 MT, up 44 percent from the initial forecast in MY 2015/16.

Korea: Wheat Production

Crop Year

Harvested Area(Hectare)

Yield(MT/HA)

Production(MT)

2006

1,738

3.34

5,810

2007

1,928

3.81

7,624

2008

2,549

4.06

10,359

2009

5,067

5.15

26,087

2010

12,548

3.12

39,116

2011

13,044

3.35

43,677

2012

9,467

3.91

37,014

2013

7,373

3.68

27,130

2014a/

7,180

3.26

23,409

2015a/

10,076

3.55

35,800

Source: Ministry for Agriculture, Food, and Rural Affairs (MAFRA), Statistics Korea (KOSTAT)

a/ FAS/Seoul forecast; yield is based on five year average.

Consumption:

The MY 2015/16 wheat consumption forecast has been slightly revised up to 3.85 million tons from the earlier forecast due to increasing local production as a result of acreage moving upward. The feed wheat consumption forecast remains unchanged at 1.5 million tons from the earlier forecast.

In MY 2014/15, total wheat consumption is expected to stay at around 3.8 million tons, down 10 percent from the previous year mainly due to lower demand for imported feed grade wheat, which has been less competitive than corn. Feed wheat consumption is estimated at 1.48 million tons used for animal feed processing. Milling wheat consumption recorded 2.36 million tons, which includes imports of flour and pasta, slightly increased from the previous year.

Korea: Monthly Wheat Use

(1,000 MT)

Month

Feed Wheat

Milling Wheat a/

MY 2013/14

MY 2014/15

MY 2013/14

MY 2014/15

July

235

129

176

183

August

219

121

173

175

September

226

126

156

166

October

245

134

185

179

November

205

130

180

172

December

159

143

180

186

January

125

115

184

194

February

100

103

161

152

March

101

116

176

183

April

100

117

180

176

May

108

119

177

172

Sub Total

1,823

1,353

1,928

1,937

June

114

125

175

177

Total

1,936

1,479

2,102

2,115

Source: KFA and KOFMIA

a/ includes wheat flour exports, but excludes the portion used in soy-sauce production

Trade:

The MY 2015/16 wheat import forecast remains unchanged from the previous project, of which, 2.5 million tons are for milling (including flour and pasta imports on a wheat equivalent basis) and 1.5 million tons for feed. Milling wheat for processing is expected to stay around 2.3 million tons. The import forecast hinges to a large extent on the continued availability of feed wheat while milling wheat is remaining steady.

MY 2014/15 wheat imports totaled 3.9 million tons, down 8 percent from the previous year due to substitution of more competitively priced corn for animal feed in the global markets. Imports of U.S. wheat in MY 2014/15 stayed at 1.23 million tons, including approximately 77,800 MT of feed grade wheat. In MY 2014/15, the EU was the major supplier of feed grade wheat, followed by Ukraine, Brazil, Canada and the United States.

Flour Trade:

MY2014/15 flour imports increased to 32,207 tons (44,059 tons wheat equivalent), up 48 percent from the previous year due to a greater demand from small-sized restaurants and noodle manufacturers. Flour exports were 45,585 tons (60,780 tons wheat equivalent), up 5 percent from the previous year. Both staples of the pasta trade were decreased by 4 percent from the previous year respectively.

Korea: Wheat Imports

(1,000 MT, Customs Cleared Basis)

Marketing Year

(July/June)

Feed Wheat

Milling Wheat

Flour Imports

1/

Pasta Import

1/

Total

05/06

1,536

2,220

41

101

3,898

06/07

976

2,298

69

108

3,451

07/08

565

2,317

105

117

3,104

08/09

1,151

2,058

69

105

3,383

09/10

2,164

2,071

127

119

4,481

10/11

2,075

2,520

63

123

4,781

11/12

2,868

2,169

42

122

5,201

12/13

2,820

2,461

39

135

5,455

13/14

1,948

2,181

30

150

4,309

14/152/

1,391

2,370

44

143

3,948

15/162/

1,500

2,300

40

160

4,000

Source: Korea Customs Service

1/ Wheat basis

2/ FAS/Seoul forecast

Korea: MY 2015/16 Feed Wheat Contracts

by

Estimated Time of Arrival (ETA)

(Unit: 1,000 MT, as of June 30, 2015)

ETA

Quantity

Price (US$/MT)1/

Jul. 2015

0

0

Aug.

233

213.96

Sep.

159

205.77

Oct.

232

203.47

Nov.

69

202.60

Total

693

Source: Local Grain Traders 1/ CNF on Weighted Average

Korea: Wheat Flour Imports

(H.S.: 1101.00.1000)

(Metric Ton, July/June)

Country

MY2009

MY2010

MY2011

MY2012

MY2013

MY2014

U.S.A.

873

531

1,025

1,318

716

793

Canada

34,213

13,540

1,381

1,037

973

829

Australia

1,252

528

223

395

658

2,041

China

1,328

583

0

121

60

0

Turkey

24,568

11,130

8,784

3,636

1,144

996

Indonesia

7,647

9,956

7,708

9,616

8,011

5,968

Hungary

8,893

110

0

0

0

0

Others

14,112

9,772

11,250

12,478

10,237

21,580

Total

92,886

46,150

30,371

28,600

21,799

32,207

Wheat Basisa/

127,068

63,133

41,548

39,125

29,821

44,059

Source: Korea Customs Service (KCS)

a/ applied converting factor: 1.368

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

May 2016

Korea, Republic of

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

7

7

7

7

7

10

Beginning Stocks

1521

1521

1437

1402

1494

1339

Production

27

27

27

23

25

36

MY Imports

4288

4309

3900

3948

4000

4000

TY Imports

4288

4309

3900

3948

4000

4000

TY Imp. from U.S.

1403

1220

0

1234

0

1300

Total Supply

5836

5857

5364

5373

5519

5375

MY Exports

144

198

150

196

150

200

TY Exports

144

198

150

196

150

200

Feed and Residual

1936

1936

1400

1479

1500

1500

FSI Consumption

2319

2321

2320

2359

2340

2351

Total Consumption

4255

4257

3720

3838

3840

3851

Ending Stocks

1437

1402

1494

1339

1529

1324

Total Distribution

5836

5857

5364

5373

5519

5375

(1000 HA) ,(1000 MT)

Corn

Production:

The Korean government recently released official numbers for corn production at 82,008 MT in MY2014, up 2 percent or 1,543 MT from the previous year with higher yields offsetting further declines d a reduction of production area.

Korea: Corn Production

Crop Year

Area (HA)

Yield (MT/HA)

Production (MT)

2006

13,661

4.73

64,623

2007

16,981

4.82

83,513

2008

18,366

5.05

92,830

2009

15,326

5.02

76,975

2010

15,528

4.79

74,339

2011

15,823

4.65

73,612

2012

17,001

4.89

83,210

2013

15,905

5.06

80,465

2014

15,839

5.18

82,008

2015a/

15,800

4.91

77,640

Source: Ministry for Agriculture, Food, and Rural Affairs (MAFRA), Statistics Korea (KOSTAT)

a/ FAS/Seoul projection based on five-year average yield

Consumption:

Corn consumption for MY 2015/16 remains unchanged from the previous forecast.

MY 2014/15 corn consumption remains unchanged at 10.1 million tons from the previous forecast, which is composed of 8 million tons for feed purposes and 2.1 million tons for food, seed and industrial (FSI) purposes. Greater demand for feed corn will offset the decrease of feed grade wheat, which is less competitive than corn in the global market.

On the basis of the first nine months, MY 2014/15 compound feed production is expected to stay around 18.8 million tons due to strong growth in the poultry sector offsetting the reduction in beef and dairy cattle, while swine numbers stayed strong and steady despite outbreaks of FMD and PED. Feed corn is expected to be the major ingredient used in poultry and swine compound feed, accounting for more than 40 percent of total ingredients for the marketing year.

Korea: Monthly Corn Use

(1,000 MT)

Month

Feed Corn

Processing Corn

MY 2013/14

MY 2014/15

MY 2013/14

MY 2014/15

October

588

676

175

180

November

596

621

165

178

December

687

707

164

169

January

703

635

161

170

February

632

602

148

155

March

653

668

180

187

April

664

658

171

178

May

669

679

177

182

S. Total

5,192

5,246

1,341

1,399

June

646

na

176

na

July

659

na

184

na

August

626

na

175

na

September

639

na

159

na

Total

7,762

na

2,034

na

Source: Korea Feed Association (KFA), Korea Corn Processing Industry Association (KOCPIA)

Korea: Feed Ingredient Use for Compound Feed Production

(October/September, 1,000 MT)

Items

MY 2012/13

MY 2013/14

MY 2014/15a/

MY 2015/16a/

Sub. Total Grains and Grain Substitutes

12,115

12,080

12,100

12,100

- Wheat

2,710

1,633

1,400

1,500

- Corn

6,483

7,762

8,000

7,900

- Other Grains and Grain Substitute b/

2,992

2,685

2,700

2,700

Others c/

6,698

6,758

6,700

6,700

Grand Total

18,883

18,838

18,800

18,800

Source: Korea Feed Association (KFA)

a/ FAS Seoul forecast

b/ includes Tapioca, bran and gluten feed.

c/ includes vegetable protein meal, animal protein, minerals/additives, tallow, DDGS and molasses.

Korea: Compound Feed Production by Species

(October/September, 1,000 MT)

Species

MY 2012/13

MY 2013/14a/

MY 2014/15b/

MY 2015/16b/

Poultry

4,726

5,107

5,300

5,200

Swine

6,100

6,015

6,100

6,300

Cattle

6,572

6,388

6,000

5,900

Others c/

1,483

1,314

1,400

1,400

Total

18,881

18,824

18,800

18,800

Source: Ministry for Agriculture, Food, and Rural Affairs (MAFRA)

a/ Preliminary

b/ FAS/Seoul forecast

d/ include ducks, rabbit, horse, sheep, deer, quail etc

Trade:

MY 2015/16 total corn imports are forecast at 9.8 million tons, slightly lower than USDA official forecast, remaining unchanged from post's earlier forecast due to continued high animal inventories in spite of the government inventory reduction program. Processing corn imports should remain stagnant at 2 million tons.

Based on imports for the first eight months, corn imports for MY 2014/15 have been revised to 10 million tons, up 0.4 million tons from the Post's earlier estimate of 9.6 million tons due to a stronger than expected demand for animal feed from all animal sectors except for beef and dairy cattle. U.S. corn exports to Korea are expected to stay around 3.6 million tons, down more than 20 percent from the previous year due to strong competition with the countries of South America and the Black Sea.

By the end of June 2015, Korean buyers completed corn contract deliveries for MY 2014/2015 (Oct/Sep), and continue to make new contracts for delivery in December 2015. Most of the contracted purchases to date are optional origin at the seller's option from the United States, South America, or Europe including the Black Sea with strong competition from South America (SOAM) and the Black Sea region.

Korea: Corn Imports

(1,000MT, Customs Cleared Basis)

Marketing Year

From World

From the U. S.

U. S. Share

Feed

Processing

Total

Feed

Processing

Total

%

07/08

7,680

1,629

9,309

7,259

1,077

8,336

90

08/09

5,781

1,431

7,212

4,883

921

5,804

80

09/10

6,457

2,003

8,460

6,097

1,407

7,504

89

10/11

6,060

2,047

8,107

5,183

1,133

6,316

78

11/12

5,600

2,035

7,635

3,450

307

3,757

49

12/13

6,230

1,944

8,174

341

115

456

6

13/14

8,319

2,086

10,405

3,769

842

4,611

44

14/15a/

8,000

2,000

10,000

3,000

600

3,600

36

15/16a/

7,800

2,000

9,800

3,500

500

4,000

41

Korea: MY 2014/15 Monthly Corn Imports by Origin

(1,000 MT, based on Customs Clearance)

Country

U. S.

Argentina

Brazil

Ukraine

Serbia

Others1/

Total

Feed Corn

2014 Oct.

480

161

120

0

0

85

846

Nov.

181

32

202

0

0

50

465

Dec.

28

69

425

165

0

63

750

2015 Jan.

50

30

311

352

0

0

743

Feb.

18

2

259

275

0

4

558

Mar.

192

7

249

140

11

37

636

Apr.

541

0

35

177

0

6

759

May

477

0

6

158

0

48

689

Jun.

355

57

0

92

1

131

636

2014/15 (Oct-Jun)

2,322

358

1,607

1,359

12

424

6,082

2013/14 (Oct-Jun)

2,104

112

1,796

1,646

0

672

6,330

Processing Corn

2014 Oct.

79

0

89

0

0

13

181

Nov.

84

0

86

0

0

13

183

Dec.

17

0

2

0

30

88

137

2015 Jan.

12

0

71

0

39

46

168

Feb.

1

0

42

0

45

50

138

Mar.

50

0

6

77

103

22

258

Apr.

65

0

1

11

55

13

145

May

86

0

2

1

31

42

162

Jun.

35

0

0

75

16

82

208

2014/15 (Oct-Jun)

429

0

299

164

319

369

1,580

2013/14 (Oct- Jun)

501

4

181

60

398

532

1,676

Total

2014 Oct.

559

161

209

0

0

98

1027

Nov.

265

32

288

0

0

63

648

Dec.

45

69

427

165

30

151

887

2015 Jan.

62

30

382

352

39

46

911

Feb.

19

2

301

275

45

54

696

Mar.

242

7

255

217

114

59

894

Apr.

606

0

36

188

55

19

904

May

563

0

8

159

31

90

851

Jun.

390

57

0

167

17

213

844

2014/15 (Oct-Jun)

2,751

358

1,906

1,523

331

793

7,662

2013/14 (Oct- Jun)

2,605

116

1,977

1,707

398

1,203

8,006

Source: Korea Customs Service

1/ Russia (332,464 MT), Romania (167,268 MT), South Africa (146,627 MT), Hungary (86,084MT) and Australia (30,066 MT)

Corn

2013/2014

2014/2015

2015/2016

Market Begin Year

Oct 2013

Oct 2014

May 2016

Korea, Republic of

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

16

16

16

16

16

16

Beginning Stocks

1265

1265

1860

1859

1438

1841

Production

80

80

78

82

77

77

MY Imports

10406

10405

9600

10000

10000

9800

TY Imports

10406

10405

9600

10000

10000

9800

TY Imp. from U.S.

5324

4611

0

3600

0

4000

Total Supply

11751

11750

11538

11941

11515

11718

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

7762

7762

8000

8000

8100

7900

FSI Consumption

2129

2129

2100

2100

2100

2100

Total Consumption

9891

9891

10100

10100

10200

10000

Ending Stocks

1860

1859

1438

1841

1315

1718

Total Distribution

11751

11750

11538

11941

11515

11718

(1000 HA) ,(1000 MT)

Rice, Milled

Production:

According to a recent Korea Rural Economic Institute (KREI) survey of rice farmers for the period May 1- 12, 2015, estimated planting area declined to 799,000 HA, down about 0.2 percent from the initial surveyed forecast or down 2.1 percent over last year, due to continued bearish trend in rice prices following harvest of the 2014 rice crop. However Post's forecast for rice production in MY 2015/16 remains unchanged at 4 million metric tons (MMT) as rice farmers prefer planting higher yield varieties that could make up for the small scale reduction of rice planting acreage.

Government Rice Purchase Program under the Public Food Grain Stockholding Program (PFSP):

As government made an additional purchase of 77,000MT (milled basis) in May 2015, total government rice purchases reached 610,000 MT, or 14.4 percent of total 2014 crop production under the PFSP program. The Korean government had pledged to purchase 77,000 MT in addition to 533,000 MT, propping up farm gate prices.

Consumption:

Consumption remains unchanged from the previous report.

Trade:

In 2015, during the period of special treatment agreed upon under the Minimum Market Access agreement (MMA) ending in December 31, 2014, Korea continues to import the mandatory volume of 408,700 metric tons from Most Favored Nation (MFN) countries at the duty level of 5 percent under the tariff rate quota (TRQ) regime Accordingly, the aT (Korea Agro-Fisheries and Food Trade Corporation), the government's state trading arm, manages the purchase of all imported rice through a tendering process and subsequent auctions off imported table rice.

2015 TRQ Tendering Process:

The Korean government has been making purchases for the 2015 TRQ of 408,700 MT since January 2015. As of July 8, the aT has purchased 305,027 metric tons of brown rice for processing purposes, equivalent to 274,524 metric tons (milled), about 67 percent of the entire 2015 TRQ import commitment. The United States has sold 102,352 metric tons of medium grain brown rice (or 92,117 metric tons, milled), 23 percent of the 2015 TRQ. The Korean government is expected to continue purchases of the remaining 134,176 metric tons (milled) within calendar year 2015.

Auctions:

The aT sells table rice shipments through a public auction system. The Ministry for Agriculture, Food, and Rural Affairs (MAFRA) distributes processing rice to end-users such as food processors and alcoholic beverage producers at a set price throughout the year.

aT should have begun selling U.S. milled rice under the 2014 MMA in January 2015 as an initial cargo of 4,451 metric tons of USDA No. 3 grade arrived in Korea at the end of 2014. However, port disputes in the West Coast prevented other U.S. rice cargoes from timely arrival at destination. Consequently, aT delayed U.S. rice selling auctions till early February 2015.

Even though aT belatedly started auctioning off U.S. milled rice imported under the 2014 MMA, greater demand for U.S. milled rice than other origins made the selling auctions of USDA No. 3 completing early June 2015. The ongoing auction prices of U.S. medium grain milled rice are higher than Chinese short grain milled rice, reflecting greater consumer confidence than other origins. The progress of auctioning for Chinese origin has been comparably slow while Thai and Australian milled rice are still sitting in warehouses. Auctions for Thai milled rice are still pending under the 2013 MMA.

Exports:

Korea's rice exports have been improved for the first six months in CY 2015 compared to the same period in the previous year, with the expectation of being limited to around 2,000 MT per annum. U.S. imports of Korean rice are expected to be negligible.

Rice, Milled

2013/2014

2014/2015

2015/2016

Market Begin Year

Nov 2013

Nov 2014

May 2016

Korea, Republic of

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

833

833

816

816

800

799

Beginning Stocks

780

780

899

899

1158

1250

Milled Production

4230

4230

4241

4241

4100

4000

Rough Production

5632

5632

5638

5638

5451

5318

Milling Rate (.9999)

7511

7511

7522

7522

7522

7522

MY Imports

313

313

470

560

410

410

TY Imports

379

379

450

470

410

410

TY Imp. from U.S.

38

38

0

150

0

120

Total Supply

5323

5323

5610

5700

5668

5660

MY Exports

2

2

2

2

2

2

TY Exports

2

2

2

2

2

2

Consumption and Residual

4422

4422

4450

4448

4360

4355

Ending Stocks

899

899

1158

1250

1306

1303

Total Distribution

5323

5323

5610

5700

5668

5660

(1000 HA) ,(1000 MT)