Report Highlights:

MY 2013/14 wheat consumption is revised to 4.3 million tons from the previous forecast, down 400,000 MT due to decreased use in compound animal feed. Conversely, MY 2013/14 corn consumption forecast is revised to 9.6 million MT, up 500,000 MT, replacing feed grade wheat. MY 2013/14 corn import forecast is revised to 9.5 million MT, up 500,000 tons, of which U.S. exports are estimated at 3 million tons, up one million tons from Post’s previous forecast due to competitive prices. Rice consumption and imports remain unchanged for the previous report.

WHEAT

Consumption:

MY 2013/14 wheat consumption is revised to 4.3 million tons from the previous forecast, down 400,000 MT due to anticipated slow feed wheat use for compound animal feed for the second half of MY 2013 as feed grade wheat contracts sharply declined after December 2013 arrival. Competitively priced feed corn replaced the decreased portion of feed wheat. Milling wheat consumption is unchanged from the previous forecast.

Wheat Trade:

MY 2013/14 wheat imports are expected to decrease to 4.1 million tons, down 400,000 tons from the previous forecast due to decreased contracts of feed grade wheat which are less competitive than feed corn since November 2013 arrival in Korea.

According to trade and sales contract data of optional origin, around 1.4 million tons were contracted with delivery for MY2013/14. Feed millers expect to make small amounts of feed wheat contracts possible under the current price structure between feed corn and wheat. Latest contracts showed that feed wheat price was US$ 50-60 per ton higher than feed corn price.

CORN

Consumption:

MY 2013/14 corn consumption forecast is revised to 9.6 million MT, up 500,000 MT from the previous USDA forecast due to greater demand for feed corn, which partly offset the decreased portion of feed grade wheat, because of high animal inventories through the end of 2014. Food, seed, and industrial (FSI) corn consumption forecast remains around 2.1 million tons, unchanged from the previous forecast due to stable demand for processed corn products.

In MY 2012/13, estimated corn inclusion rate was 34.3 percent of total ingredients for compound feed production, 2.7 percent higher than the previous year. This ratio is projected to increase to 41 percent in MY 2013/14 as feed corn price becomes more competitive and is the preference of local animal growers.

However, compound feed production is expected to decline to 18.3 million tons in MY 2013/14, down 0.5 million tons, or declining three percent from the previous year due to animal growers’ continued efforts to reduce animal inventories to combat bearish trends in domestic meat prices resulting from strong animal inventories in CY 2013. However, Korean animal growers are expected to slow the pace of reduction in animal inventories amid a downtrend in compound feed prices caused by raw ingredients.

Major corn processors have continued using non-GM corn imported from Serbia, Hungary and Brazil for food. For industrial purposes, GM corn imported from the United States is primarily used. Many food processing companies are reluctant to use ingredients sourced from biotech corn.

Trade:

MY 2013/14 corn import forecast is revised to 9.5 million MT, up 500,000 tons from the previous forecast due to increased feed corn imports that may offset the limited feed grade wheat supply as feed corn prices become more attractive than feed wheat. Feed wheat imports are expected to slow in the first half of CY 2014.

As of the end of November 2013, importers contracted 5.8 million tons of corn for October 2013 through May 2014 deliveries. Most of the contracted purchases for feed corn to date are optional origin at seller’s option from South American countries, Eastern Europe and the United States with a price range of $237-273 per metric ton CNF, while corn processors have contracted for No. 2 GM/non-GM yellow corn from South America and conventional corn from Eastern Europe with a price range of $237-280 per metric ton CNF. Most recent buying contracts were stabilized in a range of $236-246 per ton CNF for feed corn and $ 255-270 for processing corn.

In MY 2013/14, U.S. corn exports to Korea are revised to increase to 3 million tons, up one million tons from post’s previous forecast due to greater supply of competitively priced U.S. corn. As of late November 2013, Korean buyers completed corn contracts delivering in the first seven months of the current marketing year, about 5.8 million tons. Most of the contracted purchases to date were for worldwide origins including South America, Eastern Europe and the United States at seller’s option. Grain traders predicted that most of the contracts would be shipped from the United States for March 2014 arrival in Korea at earliest. However, favorable prices resulted in shipments arriving in December 2013.

RICE

PRODUCTION

No change from the previous report.

CONSUMPTION

Korea’s rice consumption pattern remains unchanged from the previous forecast.

TRADE

In MY 2013/14, rice imports remain unchanged from the previous forecast at 410,000 metric tons as the Korean government will try to deliver the 2014 Minimum Market Access (MMA) commitment within the corresponding calendar year prior to graduating the regime of Minimum Market Access (MMA) under WTO. U.S. rice exports are expected to stay around 140,000 MT forecast by the 2014 MMA purchasing plan released by Korean government.

In MY 2012/13, Korea’s rice imports reached 510,106 MT, consisting of 243,751 MT imported under 2012 MMA quota and 266,355 MT imported under 2013 MMA quota, respectively. U.S. exports to Korea were at 175,507 MT, which are composed of 71,677 MT imported under 2012 MMA quota and 103,830 MT imported under 2013 MMA quota, respectively.

2014 MMA Purchasing plan:

Under the 2014 Minimum Market Access (MMA) purchasing plan, Korea will purchase 408,700 MT of rice (milled basis), up 20,347 MT or about 5 percent up from last year, comprised of 203,472 MT under the global quota (GQ) and several country specific quotas (CSQ) totaling 205,228 MT.

The United States is expected to command 120,000 to 130,000 MT, or roughly 29- 32 percent of the total MMA volume. The anticipated U.S. share is calculated by adding the 43,270 MT allocated to medium grain and some portion of optional varieties allocated under GQ to the 50,076 MT of U.S. CSQ.

The 2014 U.S. CSQ, totaling 50,076 MT, consists of 44,507 MT of table rice and 5,569 MT for processing. The U.S. table rice allocation of 44,507 MT compares to 42,291 MT in 2013, a 5 percent increase from the previous year in response to a greater demand for U.S. medium grain in the Korean consumer market.

The Korean government allocated 21,090 MT of optional variety between medium and short grain milled rice for table purpose under the 2014 global quota, which offset the decrease in table rice under the Chinese CSQ. This creates an opportunity for U.S. bidders to sell additional table rice to Korean consumer markets.

2013 MMA Tendering Results:

Korea's contracts for rice imports under the 2013 WTO Minimum Market Access (MMA) system expanded market access opportunity for U.S. rice suppliers. Korea purchased a total of 388,353 metric tons (MT) of rice from the United States, China, Thailand, Australia, Vietnam and India. The U.S. share was 30 percent, with contracts totaling 114,600 MT (milled) worth US$89 million. In addition to the U.S Country Specific Quota of 50,076 MT, the United States successfully contracted 64,524 or 34.3 percent of the total Global Quota (GQ) of 188,251 MT.

Auctions for Imported Table Rice:

Korea Agro-Fisheries & Food Trade Corporation (aT) sells table rice shipments through a public auction system, while the Ministry of 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.

In response to favorable consumer confidence in U.S. medium grain milled rice, aT has continued selling U.S. medium grain rice for both USDA No. 1 and No. 3 grades under the 2013 CSQ contracted to deliver from March through December 2013. The progress of auctioning for other origins has been comparably slow. Auctions for Chinese milled rice under 2013 CSQ started off in the middle of December 2013 after completing 2012 CSQ in November 2013. Auctions for Thai milled rice are still pending under the 2012 MMA