Report Highlights:

MY 2014/15 soybean planting area is forecast to decrease 7 percent from the prior year to 74,452 hectares due to depressed prices as a result of increased production in MY2013/14. Production was up 26 percent to 154,067 MT, an increase of 31,548 MT. MY2014/15 consumption is forecast slightly lower at 1.28 million MT compared to 1.3 Million MT in MY 2013/14 with 850,00MT used for crushing and 400,000 MT for food processing.

Oilseed, Soybean


Soybeans account for approximately 70 percent of Korea’s total oilseed production, while sesame and perilla combine for about 22 percent of the total. The remainder largely consists of rapeseed and peanuts. However, the Korean government has not released rapeseed production numbers since CY 2010.

The Korean Rural Economic Institute (KREI) conducted a nationwide planting intention survey of 868 soybean farmers from December 23-28, 2013. According to the survey results, MY 2014/15 soybean area is forecast to decrease to 74,452 hectares, down 5,579 hectares or 7 percent from the previous year’s plantings. This decrease is due to domestic soybean prices that have been bearish since October 2013. Using the KREI survey results as a benchmark, Post is forecasting MY 2013/14 soybean production to decrease by 18 percent from the previous year on a five-year-average yield.

In MY 2013/14, soybean production increased to 154,067 MT, up 31,548 MT or 26 percent from the previous year due to favorable weather conditions coupled with no typhoons and increased sunlight despite a decrease in area, resulting in the highest yield since 2010. The sharp increase in production caused downward pressure on local soybean prices since last fall.

In CY2013, government soybean purchases were approximately 9,000 MT, while the prior three years purchases were zero as farmers opted to sell their beans through commercial channels at higher prices than the government purchase price. However, bearish commercial market prices caused by a bumper crop forced farmers to sell their soybeans to the government at the prescribed rate which increased by 7 percent from the previous year, fixing at Korean Won 3,868/kg ($3.54).


Soybeans account for the majority of oilseed consumption. Consumption in MY 2014/15 is forecast slightly lower from the current marketing year at 1.28 million MT due to expected smaller domestic production than the previous year, of which 850,000 MT will go for crushing and 380,000 MT for food processing use in items like tofu, soymilk and soy sauce. All domestic production goes to food use. Future growth in overall soybean consumption is expected to be minimal. A leading Korean soybean crusher, CJ Corporation, decided to return to soybean crushing from canola seed crushing in its facilities adapted to process rapeseed/canola seed or soybeans since the second half of 2013. The flexible crushing facilities operated according to a comparison of crushing margins between rapeseed/canola and soybeans since December 2012. In MY 2012/13, CJ Corporation crushed 62,000 MT of canola seed.

In MY 2013/14, soybean consumption is expected to increase to 1.3 million MT due to a greater consumption for both crushing and food processing, consisting of 850,000 MT and 400,000 MT respectively. Because of canola seed’s narrow crushing margin, CJ Corporation returned to soybean crushing is expected to increase soybean consumption for crushing to 850,000 MT, up 5 percent from the previous year. Bearish domestic prices caused by a bumper crop will lead to increased domestic soybean use for food processing as well.


Soybeans account for more than 85 percent of total oilseed imports of which approximately three-fourths are used for crushing. MY 2014/15 soybean imports are forecast to remain unchanged from the current marketing year estimate of 1.15 million MT. MY 2013/14 soybean imports are expected to increase 3-5 percent from the previous year due to a better crushing margin than canola seed.


Imports of crushing soybeans in MY2014/15 are forecast to remain largely unchanged from the current marketing year’s estimate of 850,000 MT in consideration of crushers’ preference to process soybeans rather than rapeseed.

Imports during the first three months of MY2013/2014 (Oct-Dec) reached slightly less than 200,000 MT with an additional 680,000 MT contracted for delivery during Jan - Sep 2014. As import numbers during the first quarter of MY2013/14 were up 10 percent over the same period of MY 2012/13, crushers are expected to import 3-5 percent more than the previous year’s level due to improved crushing margins of soybean complex.

The CY 2014 autonomous crushing soybean quota is one million tons with an adjustable in-quota tariff, which was cut from 3 percent to zero. Under the KORUS FTA, the duty on U.S. crushing soybeans fell to zero immediately as of March 15, 2012. In MY 2012/13 the majority of crushing beans came from the United States and Brazil followed by Paraguay.

The Korean government removed rapeseed from the list of autonomous duty reduction in CY 2014, while 75,000 tons were set at five percent, down from 10 percent of base rate for the first half of CY 2013.

Food Use

The Korea Agro-Fishery and Food Trade Corporation (aT), the government’s state trading arm, controls the bulk of marketing of non-GMO food grade soybeans for food processing. aT distributes soybeans to end-users and charges a mark-up for handling costs and cleaning, which involves removing any foreign material and/or broken soybeans upon arrival.

Under its CY 2015 TRQ based procurement plan, aT contracted for 200,000 MT of soybeans on basis trading contracts at the end of 2013, with delivery during the first half of CY 2015.

Accordingly, in MY 2014/15 imports of food grade soybeans are forecast in the range of 300,000-320,000 MT, with the majority coming from the United States followed by China, Canada, and Brazil. The United States is expected to retain 60 – 70 percent of the import market for food use soybeans. The gains under the KORUS FTA will further strengthen the U.S. position. U.S. food grade soybeans are primarily used in products like tofu, soybean paste/sauce and soymilk, while China mainly supplies soybeans for sprouting.

In CY2013, aT distributed about 230,000 MT of imported food-quality soybeans (excluding soy by-products and sprouts) at an average price of Korean Won1,020 per KG (or $932/MT), which was unchanged from the previous year. During this period, the average price of imported soybeans for food processing was $766/MT (CIF). Based on these figures, aT made an estimated $38 million in selling imported food grade soybeans to end-users.

Under its CY 2014 TRQ of 271,950 MT based procurement plan, aT will directly import 251,950 MT of soybeans, of which 216,950 MT is for food processing and 35,000 MT is for sprouting. The import license for the remaining 20,000 MT has been allocated to end-users, who can contract with soybeans suppliers directly. In late 2012, aT purchased 200,000 MT on basis trading contracts from the United States for delivery during the first half of CY 2014. The remaining 16,950 MT will likely be purchased off the spot market sometime in CY 2014 with delivery during the second half of CY 2014.

The government set the 2014 autonomous TRQ for U.S. #1 grade soybeans at 271,950 MT, consisting of approximately 45,000 MT of soybeans for sprouting and 226,950 MT for food processing. The TRQ also includes a 20,000 MT allocation for direct import under an import license quota, consisting of 10,000 MT of soybeans for sprouting and 10,000 MT of food grade soybeans, which will effectively allow end-users or importers to bypass aT and buy from direct sources. The applicable in-quota tariff rate is 5 percent, while the out-of-quota tariff rate is a prohibitive 487 percent, or 956 Korean won (or US$ 0.87) per kg, whichever is greater.

Under the KORUS-FTA, Korea has established a zero tariff rate quota for 10,000 MT of food-grade identity-preserved (IP) soybeans in the first year of the agreement in CY 2012, increasing to 20,000 MT in year two and 25,000 MT in year three. For years four and beyond, the TRQ grows three percent annually in perpetuity. The TRQ is administered by associations of food-grade soybean processors and gives U.S. suppliers direct market access to these companies. However, Korean food soybeans processors imported just 3,453 MT, or 35 percent of the 2012 KORUS FTA quota due to unexpectedly high U.S. soybean prices, short lead time for contracting IP soybeans, and the availability of lower-priced soybeans marketed by aT. In CY 2013, Korean soybean processors who secured 20,000 MT of TRQ under KORUS FTA imported 12,046 MT, or 60 percent of the 2013 TRQ because they failed to purchase IP food grade soybeans in the spot markets on time, which has typically traded on a contract farming basis. Therefore, it would benefit Korean buyers to secure IP food grade soybeans through farming contracts under the KORUS FTA TRQ in the future.

Meal, Soybean

Meal, Rapeseed


Almost all of the vegetable meal produced in Korea is made from imported soybeans. As CJ Corporation decided to return to soybean crushing from rapeseed crushing since the second half of 2013 due to narrower rapeseed crushing margins, soybean meal production will increase from the previous year in the near future.

There are only two soybean crushers in Korea, namely CJ Corporation and Sajo O&F Co Ltd with a crushing ratio of 66:34 percent.

MY 2014/15 demand for crushing soybeans will remain flat at 850,000 MT as crushing margins remain tight and demand steady. Soybean demand for crushing is steady, but still below the country’s 1.0 million MT crushing capacity. Soybean meal production for MY 2014/15 is forecast to hold steady at 670,000 MT with an extraction rate of 79.2 percent and crude protein content of 44 percent, remaining unchanged from the current marketing year.

MY 2013/14 soybean meal production is expected to increase 5 percent to 670,000 MT due to better soybean crushing margins than the previous year.

In an effort to strengthen their competitiveness against imported meal from South America and India, these companies have started producing de-hulled Hi-pro soybean meal with 47.0 percent protein content by blending U.S. and Brazilian soybeans. In CY 2013, production of de-hulled Hi-pro soybean meal with 47 percent protein was up, accounting for 38 percent of total soy meal production, from the previous 25 percent. Local crushers continue to expand de-hulled hi-pro production.

The breakdown of production by company and product follows. In CY 2013, CJ produced 47 percent protein dehulled meal and 45% protein meal in a ratio of 62:38, increasing the production of 47 percent protein meal from the previous 40:60 ratio. However, Sajo produced 46 percent and 45 percent protein meal at a ratio of 30:70, decreasing the production of 46 percent protein meal in view of the previous 50:50 ratio.


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 10.5 percent of the total compound feed production in MY 2012/13, down 0.9 percent point due to bullish prices of imported soybean meal, which was partly offset by cheaper priced copra and palm kernel meals.

MY 2014/15 soybean meal consumption is forecast to remain at 2.2 million MT, unchanged from the current marketing year as local animal inventories are expected to maintain similar levels as MY 2013/14.

MY2013/14 soybean meal consumption is predicted to stay at 2.2 million MT as the livestock sector continues to maintain high animal inventories for the marketing year because pork and beef prices rebounded from the bottom by adjusting excessive inventory numbers in MY 2012/13.

Rapeseed meal consumption for feed in MY 2014/15 is forecast to stay around 410,000 MT. MY2013/14 consumption is expected to remain unchanged from the previous year as animal growers tried to maintain inventories after reducing their excessive inventories during the previous marketing year.


Soybean meal imports during MY 2014/15 are forecast to remain at 1.6 million MT, unchanged from the current marketing year as the Korean livestock industry continues to maintain reduced levels of animal inventories. Despite an increase of 15 percent in soybean meal imports for the first three months over the same period of MY 2012/13, the MY 2013/14 soybean meal import estimate is expected to stay around 1.6 million MT, slightly down from the previous year as reduced animal inventories lead to lower compound feed production. Depending on U.S. soybean meal contracts, imports of U.S. soybean meal during this period are expected to stay around 200,000 MT.

Rapeseed meal imports during MY 2014/15 are forecast at 430,000 MT, remaining unchanged from the current marketing year due to stagnant consumption for feed production. In MY 2013/14, rapeseed meal imports are expected to increase slightly to meet constant demand for feed production due to decreasing local production as a result of narrow crushing margins in rapeseed. India supplies nearly 100 percent of rapeseed meal to Korea, expecting to remain the top supplier for the foreseeable future. Palm kernel meal and copra meal imports are each forecast between 600,000-800,000 MT in both MY 2013 and MY 2014, respectively.

The CY 2014 autonomous soybean meal TRQ was initially set at 2.7 million MT with a zero percent in-quota import duty, unchanged from the previous year. The CY2014 TRQ for DDGS is set at 500,000, down 46 percent from last year due to a zero percent in-quota import duty. In order to help the livestock industry, which has suffered inflated prices of imported raw materials, the Korean government has maintained the autonomous zero duty TRQs for other vegetable protein meals such as cottonseed meal, copra meal, palm kernel meal, and cottonseed hulls. TRQ volumes for copra meal and palm kernel meal have gone down to 100,000 MT each due to the Korean-ASEAN FTA.

Under the Korean-ASEAN FTA, copra and palm kernel meals are imported duty free from South East Asian countries such as Indonesia, Malaysia and the Philippines. Indian soybean meal is imported duty free under the Korea-India Comprehensive Economic Partnership Agreement (CEPA). As part of the KORUS FTA, Korea eliminated import duties on vegetable protein meals such as soybean meal (2304.00.0000), DDGS (2303.30.0000), and cottonseed meal (2306.10.0000) since March 15, 2012.


Korea exports some locally crushed soybean meal that is less competitive than imported meal. Soybean meal exports for MY 2014/15 are forecast to remain unchanged from the current marketing year’s estimate of 80,000 MT on a five year average basis. The major markets for Korean soybean meal are Japan, Indonesia, Malaysia and Vietnam.

Oil, Soybean

Oil, Palm


Because of narrow price margins resulting from competitive South American oil, MY 2014/15 soybean oil production is forecast to remain unchanged from the current marketing year estimate of 155,000 MT. MY 2013/14 soybean oil production is expected to increase slightly due to better crushing margins than rapeseed, resulting in crushers returning to soybean crushing from rapeseed in its flexible crushing facilities.


Soybean oil and palm oil account for 72 percent of the country’s total oils supply in MY 2012/13. The majority of soybean oil is consumed in the HRI sector and home, and more recently in the biodiesel sector. Food processors and restaurants rely heavily on imported soybean oil while locally processed soybean oil is generally for home use. Palm oil is primarily used for food processing, especially ramen (instant noodle) production, since it is more functional and cheaper than soybean oil. Palm oil has been increasingly used in local biodiesel production.

Soybean oil consumption in MY 2014/15 is forecast at 440,000 MT, remaining unchanged from the current marketing year’s estimate because of dwindling demand for bio-diesel production as it is less cost effective. Meanwhile, palm oil consumption during this period is forecast at 350,000 MT, up 3 percent from the current marketing year because of rising demand from the bio-diesel sector.


The biodiesel sector has been the main driver behind rising edible oil imports since MY 2007/08. MY 2014/15 soybean oil imports are forecast at 300,000 MT, remaining unchanged from the current marketing year’s estimate due to anticipation of a limited demand for biodiesel caused by lower price competitiveness compared to palm oil. In MY 2013/14, soybean oil imports are stagnant at 300,000 MT, remaining unchanged from the previous year. Soybean oil imported from South America, particularly Argentina, is much more price competitive than domestically produced soybean oil made from imported soybeans.

In MY 2014/15, palm oil imports are forecast to increase 3 percent to 360,000 MT mainly due to rising demand from the biodiesel industry. Palm oil imports for biodiesel are expected to reach 140,000 MT, up 8 percent from the current marketing year estimate as it’s more competitively priced than other oil-based feed stocks. Palm oil imports for use in the local soap industry are expected to remain steady at 20,000 MT. In MY 2013/14, palm oil imports are expected to increase to 350,000 MT to meet greater demand for biodiesel purpose than the previous year.

As international edible oil price has stabilized, the government has removed edible oils from the list of autonomous TRQ in CY 2014. Palm oil has been imported duty free under Korea-ASEAN FTA since June 2007.

Under the KORUS FTA effective since March 15, 2012, Korea’s 5.4 percent duty on imports of crude soybean oil is scheduled to be phased out in 10 equal annual reductions, while the 5.4 percent on refined soybean oil will be phased out in five equal annual reductions. Korea eliminated the import duty on palm oil immediately