Production:

MY 2015/16 wheat production is forecast to decline to 24,900 tons, down 6 percent from the current marketing year's estimate due to decreased planting area. The upland direct payment program doesn't increase wheat planting area because wheat requires a longer growing period compared to other winter crops such as barley and forage crops, hindering timely rice transplantation as a double crop after wheat cultivation. The Korean government has made upland direct payment of 400,000 Korean Won (US$380) per hectare to farmers who have grown winter crops in their paddy fields since 2014.

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

2014 a/

7,180

3.70

26,500

2015 a/

7,000

3.55

24,900

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

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

Consumption:

MY 2015/16 wheat consumption is forecast at 3.84 million tons, an increase of nearly 120,000 tons from the current marketing year due to an anticipated increase of available supply of competitively-priced feed wheat, as milling wheat consumption remains stable.

MY 2015/16 milling wheat consumption, including flour and pasta trade on a wheat basis, is forecast at 2.34 million tons, a slight increase from the current marketing year.

In MY 2014/15, total wheat consumption is expected to stay around 3.72 million tons, down 13 percent from the previous year mainly due to lower demand for imported feed grade wheat which has been less competitive than corn. Milling wheat consumption is expected to be 2.32 million tons, which includes imports of flour and pasta, almost the same as 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

174

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

Sub Total

1,541

1,001

1,395

1,406

March

101

na

176

na

April

100

na

180

na

May

108

na

177

na

June

114

na

175

na

Total

1,936

na

2,102

na

Source: KFA and KOFMIA

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

Korea: Post Estimates of Domestic Wheat Use

(1,000 MT, July/June)

Year

2012/13

2013/14

2014/15c/

2015/16c/

Imported Milling Wheat 1/

2,193

2,132

2,130

2,150

Imported Milling Wheat 2/

167

180

180

180

Flour Imports a/

39

33

35

35

Flour Exports a/

62

63

65

65

Pasta Imports a/

135

150

150

155

Pasta Exports a/

130

140

130

140

Local Wheat

37

27

27

25

FSI Consumptionb/

2,379

2,319

2,327

2,340

Feed Wheat

2,818

1,936

1,400

1,500

Total Consumptionb/

5,197

4,255

3,727

3,840

Source: Korea Feed Association (KFA), Korea Flour Millers Industry Association (KOFMIA) and Korea Customs Service (KCS)

a/ Wheat basis

b/ include local wheat, flour imports and pasta imports but exclude flour exports and pasta exports

c/ FAS/Seoul forecast

1/ KOFMIA members

2/ non- KOFMIA member

Korea: Wheat Flour Utilization

(1,000 MT)

Calendar Year

2009

2010

2011

2012

2013

2014

Total Consumption 1/

1,615

1,610

1,634

1,672

1,575

1,695

Per Capita (Kg/Year) 2/

31.4

32.6

32.8

33.4

31.4

33.6

Source: Korea Flour Mills Industrial Association (KOFMIA)

1/ based on flour millers' sales including exports, imports and animal feed purposes, but wheat flour production basis excluding animal feed and exports since 2010.

2/ excludes animal feed and exports from total consumption, including imports of wheat flour.

Trade:

MY 2015/16 wheat imports are projected at 4 million tons, of which 2.5 million tons is for milling (including flour and pasta imports on a wheat equivalent basis) and 1.50 million tons for feed. The import estimate hinges to a large extent on the continued availability of feed wheat with milling wheat remaining steady.

MY 2014/15 wheat imports are expected to reach 3.9 million tons given that imports for feed wheat were lower than the previous year during the first eight months of the current marketing year and pending feed grade wheat contracts for the remaining four months. In MY 2014/15 Ukraine is the major supplier of feed grade wheat, followed by Bulgaria, Canada, the United States, Romania, France and Denmark for the first eight months. Imports of U.S. wheat in MY 2014/15 are expected to reach around 1.3 million tons, including approximately 100,000 MT of feed grade wheat.

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

33

150

4,312

14/152/

1,400

2,310

35

155

3,900

15/162/

1,500

2,300

40

160

4,000

Source: Korea Customs Service

1/ Wheat basis

2/ FAS/Seoul forecast

Korea: Monthly Wheat Imports

(1,000 MT)

Month

Feed Wheat

Milling Wheat

MY 2013/14

MY 2014/15

MY 2013/14

MY 2014/15

July

249

87

77

178

August

163

35

259

189

September

198

149

91

182

October

316

230

234

237

November

161

117

129

179

December

120

97

267

206

January

130

143

129

212

February

187

64

182

168

Sub Total

1,524

922

1,368

1,551

March

42

Na

247

Na

April

125

Na

210

Na

May

74

Na

165

Na

June

183

Na

191

Na

Total

1,948

Na

2,181

Na

Korea: MY 20014/15 Monthly Wheat Imports by Origin

(1,000 MT, based on Customs Clearance)

Country

U. S.

Australia

Canada

India

Other

Total

Milling Wheat

July 2014

140

15

23

0

0

178

August

90

93

6

0

0

189

September

72

77

33

0

0

182

October

107

119

11

0

0

237

November

56

99

23

0

1

179

December

99

104

2

0

1

206

January 2015

144

49

18

0

1

212

February

75

92

0

0

1

168

Total(Jul-Feb) 2014/15

783

648

116

0

4

1,551

Total(Jul-Feb) 2013/14

719

562

87

0

0

1,367

Feed Wheat

July 2014

47

0

30

5

5

87

August

0

0

30

5

0

35

September

0

0

39

0

110a/

149

October

0

0

0

0

230b/

230

November

0

0

3

0

114c/

117

December

0

0

0

0

97d/

97

January 2015

28

0

0

0

115e/

143

February

3

0

0

0

61f/

64

Total(Jul-Feb) 2014/15

78

0

102

10

732

922

Total(Jul-Feb) 2013/14

0

0

183

249

1,092

1,524

Total Wheat

July 2014

187

15

52

5

5

266

August

90

93

36

5

0

224

September

72

77

71

0

110

331

October

107

119

11

0

230

467

November

56

99

26

0

115

296

December

99

104

2

0

97

303

January 2015

173

49

18

0

115

355

February

78

92

0

0

62

232

Total(Jul-Feb) 2014/15

862

648

216

10

734

2,473

Total(Jul-Feb) 2013/14

719

562

270

249

1,092

2,892

Source: Korea Customs Service

a/ Romania (40,675 MT); Bulgaria (69,449 MT)

b/ Ukraine (161,836); Bulgaria (46,854); Romania (21,827)

c/ Ukraine (113,736);

d/ Ukraine (96,142); Romania (1,094)

e/ Ukraine (56,456); France (57,750)

f/ Ukraine (12,002); Denmark (49,282)

Korea: MY 2014/15 Feed Wheat Contractsby

Estimated Time of Arrival (ETA)

(Unit: 1,000 MT, as of early January 2015)

ETA

Quantity

Price (USD/MT)1/

Jul. 2014

65

290

Aug.

130

289

Sep.

106

287

Oct.

194

268

Dec.

84

244

Jan. 2015

118

241

Feb.

112

249

Mar.

55

250

Apr.

110

250

May

135

242

June

145

234

Total

1,254

Source: Local Grain Traders

1/ CNF on Weighted Average

Tariff

In early January 2015, the Ministry of Strategy and Finance (MOSF) released its adjusted tariffs and tariff rate quotas (TRQ) for CY 2015. However, the government excluded milling wheat from the list of autonomous TRQ in CY 2015. The out-of- quota duty remains fixed at 1.8 percent. Of note, the feed wheat TRQ and its corresponding duty were eliminated in 2007. The duty on U.S. wheat is zero under the KORUS FTA.

In CY 2015, the flour import tariff rate is applied at 4.2 percent of the local base rate. Under KORUS FTA, import tariffs for U.S. wheat flour (H.S. 1101.00.1000) are scheduled to phase out over a 5-year period, declining to 0.8 percent in 2015, while tariffs for meslin flour (H.S. 1101.00.2000) the mixture of rye and wheat flour, immediately fell to zero.

Korea: Wheat Import Tariff Rates for CY 2015

(Percent)

Commodity

Applied Tariff Rate

Bound Tariff Rate

2014

2015

2014

2015

Durum Wheat, Seed

1001.11.0000

3

3

9.0

9.0

Durum Wheat, Other

1001.19.0000

3

3

9.0

9.0

Seed, Meslins

1001.91.1000

3

3

9.0

9.0

Seed, Other

1001.91.9000

1.8

1.8

1.8

1.8

Feeding, Meslins

1001.99.1010

3

3

9.0

9.0

Feeding, Other

1001.99.1090

0

0

1.8

1.8

Milling, Meslins

1001.99.2010

3

3

9.0

9.0

Milling, Other1/

1001.99.2090

1.8(1)

1.8

1.8

1.8

Others, Meslins

1001.99.9010

3

3

9.0

9.0

Others, Other1/

1001.99.9090

1.8(1)

1.8

1.8

1.8

Source: Korea Customs Service (KCS)

1/ The number in parenthesis is the in-quota tariff rate.

Flour Trade:

MY 2014/15 flour imports are expected to increase to 40,000 tons (wheat equivalent) to meet demand from small-sized restaurants and noodle manufacturers as they are loyal users of cheaper priced flour. Pasta imports are expected to be around 150,000 MT (wheat equivalent) based on imports for the first seven months of the marketing year. Annual flour exports are approximately 60,000 tons (wheat equivalent), while pasta exports remain around 130,000 MT (wheat equivalent).

Korea: Wheat Flour Imports

(Metric Ton, July/June)

Country

MY2009

MY2010

MY2011

MY2012

MY2013

MY2014a/

U.S.A.

873

531

1,025

1,318

716

1,056

Canada

34,213

13,540

1,381

1,037

973

811

Australia

1,252

528

223

395

658

2,707

China

1,328

583

0

121

60

0

Turkey

24,568

11,130

8,784

3,636

1,144

1,154

Indonesia

7,647

9,956

7,708

9,616

8,011

6,108

Hungary

8,893

110

0

0

0

0

Others

14,112

9,772

11,250

12,478

10,237

16,085

Total

92,886

46,150

30,371

28,600

21,799

27,921

Wheat Basis

127,068

63,133

41,548

39,125

29,821

38,195

Source: Korea Customs Service (KCS)

a/ year round based on the first seven months (July 2014-January 2015)

Korea: Pasta Imports

(Metric Ton, July/June)

Country

MY2009

MY2010

MY2011

MY2012

MY2013

MY2014a/

U.S.A.

326

424

429

512

451

336

China

64,123

62,024

61,766

65,716

73,991

72,555

Italy

13,525

16,368

15,169

19,193

20,595

21,305

Thailand

2,584

3,142

3,851

4,359

4,894

4,889

Indonesia

2,102

2,530

1,593

2,007

1,994

2,925

Turkey

2,388

2,507

3,193

3,630

4,094

3,597

Others

2,242

2,960

3,090

3,466

3,717

3,809

Total

87,290

89,955

89,091

98,883

109,736

109,416

Wheat Basis

119,413

123,058

121,876

135,272

150,118

149,681

Source: Korea Customs Service (KCS)

a/ year round based on the first seven months (July 2014-January 2015)

Korea: Wheat Flour Exports

(Metric Ton, July/June)

MY2009

MY2010

MY2011

MY2012

MY2013

MY2014a/

Total

44,234

48,056

44,909

46,843

43,230

46,963

Wheat Basis

58,979

64,075

59,879

62,457

57,640

62,617

Source: Korea Customs Service (KCS)

a/ year round based on the first seven months (July 2014-January 2015)

Korea: Pasta Exports

(Metric Ton, July/June)

Country

MY2009

MY2010

MY2011

MY2012

MY2013

MY2014a/

USA

18,000

19,189

20,365

23,694

23,979

21,375

Japan

11,106

13,811

12,773

10,989

9,833

8,117

China

4,142

4,595

5,517

5,597

7,918

8,847

Russia

2,265

2,450

3,417

3,465

3,108

2,086

Australia

4,707

5,304

4,875

4,956

5,439

4,903

Hong Kong

4,900

6,145

7,159

9,035

11,195

10,289

Others

24,973

29,435

33,521

36,954

41,090

40,262

Total

70,093

80,930

87,626

94,689

102,563

95,880

Wheat Basis

95,887

110,712

119,873

129,535

140,306

131,164

Source: Korean Customs Service (KCS)

a/ year round based on the first seven months (July 2014-January 2015)

Wheat PS&D

Wheat

2013/2014

2014/2015

2015/2016

Market Begin Year

Jul 2013

Jul 2014

Jul 2015

Korea, South

USDA Official

New post

USDA Official

New post

USDA Official

New post

Area Harvested

7

7

7

7

0

7

Beginning Stocks

1,521

1,521

1,473

1,402

0

1,414

Production

27

27

27

27

0

25

MY Imports

4,288

4,312

3,800

3,900

0

4,000

TY Imports

4,288

4,312

3,800

3,900

0

4,000

TY Imp. from U.S.

1,403

1,220

0

1,300

0

1,300

Total Supply

5,836

5,860

5,300

5,329

0

5,439

MY Exports

144

203

150

195

0

200

TY Exports

144

203

150

195

0

200

Feed and Residual

1,900

1,936

1,400

1,400

0

1,500

FSI Consumption

2,319

2,319

2,320

2,320

0

2,340

Total Consumption

4,219

4,255

3,720

3,720

0

3,840

Ending Stocks

1,473

1,402

1,430

1,414

0

1,399

Total Distribution

5,836

5,860

5,300

5,329

0

5,439

1000 HA, 1000 MT, MT/HA

Import Trade Matrix

Country

Korea, Republic of

Commodity

Wheat

Time Period

July/June

Units:

1,000MT

Imports for:

2012

2013

U.S.

1404

U.S.

1218

Others

Others

Australia

1787

Australia

940

India

1552

Romania

616

Brazil

175

Canada

444

Canada

261

India

371

Ukraine

102

Bulgaria

247

Ukraine

151

Russia

72

Turkey

48

Serbia

19

Total for Others

3877

2908

Others not Listed

0

2

Grand Total

5281

4128

Note: exclude the import of wheat flour and pasta

Korea: Milling Wheat Imports by Variety

(Arrival Basis, Calendar Year)

Origin

Variety

CY 2013

CY 2014

(1,000 MT)

%

(1,000 MT)

%

United States

No. 1 WW/SW

447,729

21.9

424,386

20.0

No. 1 WW/SW 8.5 max.

56,679

2.8

62,507

3.0

No. 1 HRW 11.5 min.

207,162

10.1

200,854

9.5

No. 1 DNS 14.0 min.

275,836

13.5

303,211

14.3

No. 2 SRW

6,504

0.3

7,042

0.3

Sub Total

993,910

48.7

998,000

47.1

Australia

ASW a/

760,902

37.3

839,394

39.6

AH b/

123,552

6.1

117,992

5.5

APH d/

206

0.0

52,979

2.5

APW e/

41,404

2.0

239

0.1

Sub Total

926,064

45.4

1,010,604

47.7

Canada

No. 2 CWRS 13.5 min.

119,372

5.8

107,400

5.0

Others

Organic Wheat

1,766

0.1

3,599

0.2

Grand Total

2,041,112

100.0

2,119,603

100

Source: Korea Flour Mills Industrial Association (KOFMIA)

a/ Australian Standard White Wheat

b/ Australian Hard Wheat

c/ Australian Noodle Wheat

d/ Australian Premium Hard

e/ Australian Premium Wheat