Highlights

Notable updates for MY 2016/17 include an increase in Korean wheat consumption to 4.9 Million Metric Tons (MMT), due to anticipated increases in consumption of competitively-priced feed grade wheat.In MY 2015/16, U.S. corn exports to Korea remain unchanged from the previous forecast at 2.5 MMT, down more than 1.5 MMT from the previous year due to strong competition with South American and Eastern European/Black Sea Region countries. Post's forecast for rice production for MY 2016/17 (harvest ends by October & marketing starts in November) is revised down to 3.93 million MMT, decreasing 70,000 metric tons (MT) from the initial forecast. MY 2016/17 ending stocks (as of the end of October 2017) are forecast to increase to 1.83 MMT or 42 percent of total consumption due to recent years of overproduction caused by higher yielding varieties. In an effort to reduce historically-high stocks, the Korean government is allowing rice from the 2012 crop to be used in animal feed for the first time.

Production

The Korean government is expected to release official numbers for wheat production in MY 2015 and the area of wheat cultivated in MY 2016 around the end of June 2016.

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

7,180

3.26

23,409

2015 a/

10,076

3.46

34,895

2016 b/

13,000

3.52

45,000

Consumption

MY 2016/17 wheat consumption forecast is revised up to 4.9 million metric tons (MMT), an increase of 0.5 MMT due to an anticipated increase in availability of competitively-priced feed grade wheat versus feed corn in recent months, with milling wheat consumption remaining stable. In MY 2015/16, total wheat consumption is expected to stay around 4.13 MMT.

Korea: Post Estimates of Domestic Wheat Use

Year

2013/14

2014/15

2015/16 c/

2016/17 c/

Imported Milling Wheat 1/

2,132

2,165

2,200

2,150

Imported Milling Wheat 2/

180

180

190

200

Flour Imports a/

30

44

60

60

Flour Exports a/

58

61

60

60

Pasta Imports a/

150

143

150

150

Pasta Exports a/

140

135

150

150

Local Wheat

27

23

35

45

FSI Consumption b/

2,321

2,359

2,425

2,395

Feed Wheat

1,936

1,490

1,700

2,500

Total Consumption b/

4,257

3,849

4,125

4,895

Korea: Monthly Wheat Use

Month

Feed Wheat

Milling Wheat a/

MY 2013/14

MY 2014/15

MY 2015/16

MY 2013/14

MY 2014/15

MY 2015/16

July

235

129

124

176

183

181

August

219

121

119

173

175

170

September

226

126

124

156

166

178

October

245

134

151

185

179

182

November

205

130

140

180

172

169

December

159

143

151

180

186

189

January

125

123

135

184

194

191

February

100

103

138

161

152

160

March

101

116

153

176

183

188

April

100

120

142

180

176

178

Sub Total

1,715

1,245

1,377

1,751

1,766

1,786

May

108

119

na

177

172

na

June

114

125

na

175

177

na

Total

1,936

1,490

na

2,102

2,115

na

Trade

The MY 2016/17 wheat import forecast is revised up to 5.06 MMT due to an increase of 0.5 MMT of feed grade wheat from previous estimates, as milling wheat imports are expected to remain stable (including flour and pasta imports on a wheat equivalent basis). Korea is expected to import 2.5 MMT of feed grade wheat with remaining imports consisting of milling wheat from the USA, Australia and Canada. For the first ten months of MY 2015/16, the Black Sea region was the major supplier of feed grade wheat followed by the EU.

MY 2015/16 wheat imports are revised down to 4.31 MMT, 40,000 MT less than previous estimates due to slower imports of recognized feed grade wheat contracts for the first ten months .

Production, Supply and Demand Data Statistics

Wheat PS&D

Wheat

Market Begin Year

2014/2015

2015/2016

2016/2017

Jul 2014

May 2015

Jul 2016

Korea, Republic of

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

7

7

10

10

13

13

Beginning Stocks

1437

1437

1411

1363

1421

1373

Production

23

23

35

35

45

45

MY Imports

3942

3948

4300

4310

4300

5060

TY Imports

3942

3948

4300

4310

4300

5060

TY Imp. from U.S.

1160

1234

0

1100

0

1300

Total Supply

5402

5408

5746

5708

5766

6478

MY Exports

153

196

150

210

150

210

TY Exports

153

196

150

210

150

210

Feed and Residual

1479

1490

1800

1700

1800

2500

FSI Consumption

2359

2359

2375

2425

2395

2395

Total Consumption

3838

3849

4175

4125

4195

4895

Ending Stocks

1411

1363

1421

1373

1421

1373

Total Distribution

5402

5408

5746

5708

5766

6478

(1000 HA) ,(1000 MT)


Consumption

Corn consumption for MY 2016/17 remains unchanged from the previous forecast as increased imports of feed grade wheat are expected to help meet greater demand for compound feed production.

Greater demand for feed corn will result from increased compound feed production on the basis of corn consumption for the first seven months in the marketing year.

According to the compound feed production comparison for the first seven months between MY 2014 and MY 2015 production in MY 2015/16 is revised up to 19.4 MMT, 2.2 percent up from the previous marketing year. This is due to strong growth in the poultry sector that's offsetting reduced demand from both beef and dairy cattle while swine demand remains relatively constant. Feed corn is expected to be the primary ingredient used in poultry and swine compound feed, accounting for about 42 percent of total ingredients for the current marketing year .

Korea: Total Corn Utilization

Marketing

Year

Feed

Processing

a/

Food

b/

Total

2008/09

6,368

1,418

108

7,894

2009/10

6,362

1,928

92

8,382

2010/11

6,074

2,051

89

8,214

2011/12

5,690

2,036

89

7,815

2012/13

6,483

1,900

98

8,481

2013/14

7,762

2,034

95

9,891

2014/15

8,035

2,118

97

10,250

2015/16 c/

8,100

2,150

95

10,345

2016/17 c/

7,600

2,200

100

9,900


Items

MY 2013/14

MY 2014/15

MY 2015/16 a/

MY 2016/17 a/

Sub. Total Grains and Grain Substitutes

12,080

12,046

12,500

12,600

- Wheat

1,633

1,480

1,800

2,500

- Corn

7,762

8,035

8,100

7,600

- Other Grains and Grain Substitute b/

2,685

2,531

2,600

2,500

Others c/

6,758

6,951

6,900

6,800

Grand Total

18,838

18,997

19,400

19,400

Corn PS&D

Corn

2014/2015

2015/2016

2016/2017

Market Begin Year

Oct 2014

Oct 2015

Oct 2016

Korea, Republic of

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Area Harvested

16

0

15

15

16

16

Beginning Stocks

1860

1860

1860

1860

1835

1885

Production

82

82

75

75

79

79

MY Imports

10168

10168

10000

10300

10500

9800

TY Imports

10168

10168

10000

10300

10500

9800

TY Imp. from U.S.

3656

4022

0

2500

0

3000

Total Supply

12110

12110

11935

12235

12414

11764

MY Exports

0

0

0

0

0

0

TY Exports

0

0

0

0

0

0

Feed and Residual

8035

8035

7850

8100

8250

7600

FSI Consumption

2215

2215

2250

2250

2300

2300

Total Consumption

10250

10250

10100

10350

10550

9900

Ending Stocks

1860

1860

1835

1885

1864

1864

Total Distribution

12110

12110

11935

12235

12414

11764

1000 HA) ,(1000 MT)

Rice Production

The urvey of rice farmers for the period April 29 – May 10, 2016, estimated planting area declined to 775,000 HA, down about 0.8 percent from the initial forecast or three percent lower than the previous year. The Korean government is campaigning to reduce rice acreage in order to lower high level rice ending stocks. Therefore, Post's forecast for rice production for MY 2016/17 is revised down to 3.93 MMT, decreasing 70,000 metric tons (MT) from the initial forecast. KOSTAT is expected to release statistics of actual rice planting acreage in August 2016.

Consumption

The Korean government recently revised rice consumption in MY 2013/14 and MY 2014/15. Domestic rice consumption in MY 2014/15 was revised down to 4,197 thousand metric tons (TMT), a decrease of 153 TMT from previous estimates. Other revisions include adjustments to 'Other and Loss' which declined in MY 2014/15 to 348 TMT from the previous 500 TMT.

Rice Year (November - October)

MY 2013/14 a/

MY 2014/15 a/

MY 2015/16 b/

MY 2016/17 c/

Table Rice

3,340

3,239

3,140

3,100

Processing

535

575

700

700

(for food)

(457)

(420)

(450)

(450)

(for liquor)

(78)

(156)

(150)

(150)

(for feed)

0

0

(100)

(100)

Seed

35

35

34

34

Other and Loss

524

348

500

500

Total Demand

4,434

4,197

4,374

4,334

Per Capita Table Rice Consumption (Kg)

65.1

62.9

61.0

59.0

Trade

Korea continues to import the mandatory import volume of 408,700 metric tons from Most Favored Nation (MFN) countries at the current duty level of 5 percent under the tariff rate quota (TRQ) regime implemented in 2015. Korea deleted provisions about usage purpose, such as the ratio of table rice (30 percent) and guaranteed access to the domestic market. The government's state trading arm, manages the purchase of all imported rice through a tendering process and subsequent auctions off imported table rice.

2016 TRQ Tendering Process

Under the 2016 Tariff Rate Quota (TRQ) purchasing plan, Korea will purchase 408,700 MT of rice (milled basis) under rice tariffication (in effect since 2015). Under the 2016 TRQ thus far, Korea has bought 178,300 MT (milled basis) or 43.6 percent of total TRQ, which consists of 153,300 MT of brown rice for processing purposes and 25,000 MT of milled rice for table purpose. The United States has sold 71,500 MT of medium grain rice worth USD 52 million, or 17.5 percent of total TRQ followed by China, Australia, Vietnam, Thailand and India Korea purchased 25,000 MT of USDA No. 1 grade milled rice as well, consisting of 20,000 MT of U.S. medium grain milled rice, 3,000 MT of Vietnamese short grain milled rice and 2,000 MT of Thai long grain milled rice, respectively

Auctions

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 more favorable consumer confidence in U.S. medium grain milled rice, greater demand for U.S. milled rice made auctioning of USDA No. 1 higher than Chinese origin. The overall progress of auctioning has been comparably slower than normal in order to prop up domestic rice prices caused by the record harvest in CY 2015. However, auctioning for Thai rice has shown progress as stocks are depleting due to wholesalers securing Thai rice for stockpiling purposes.

Exports

Despite Korea and China mutually agreeing upon SPS requirements and ratified by both governments on January 13, 2016, rice export volume for the first four months of calendar year indicates that Korea's rice export is expected to stay around 2,000 MT for both MY 2015/16 and MY 2016/17.

Korea: Rice ExportStocks

MY 2016/17 ending stocks (as of the end of October 2017) are forecast to increase to 1.83 MMT or 42 percent of total consumption due to recent years of overproduction caused by higher yielding varieties. MY 2015/16 stocks (as of the end of October 2016) are forecast at 1.83 MMT or 42 percent of total domestic consumption. MY 2014/15 stocks (as of the end of October 2015) were estimated at about 1.4 MMT or 36 percent of total domestic consumption, consisting of 60 percent of domestic rice and 40 percent of imported rice. In an effort to reduce historically-high stocks, on February 2016, the Korean government allowed 99 TMT of brown rice from the 2012 crop to be used in animal feed for the first time.

Production, Supply and Demand Data Statistics

Rice PS&D

Rice, Milled

2014/2015

2015/2016

2016/2017

Market Begin Year

Nov 2014

Nov 2015

Nov 2016

Korea, Republic of

USDA

Official

New

Post

USDA

Official

New

Post

USDA

Official

New

Post

Area Harvested

816

816

799

799

782

775

Beginning Stocks

899

899

1253

1406

1672

1827

Milled Production

4241

4241

4327

4327

4000

3930

Rough Production

5638

5638

5771

5771

5333

5241

Milling Rate (.9999)

7522

7522

7498

7498

7500

7498

MY Imports

465

465

470

470

410

410

TY Imports

372

372

410

410

410

410

TY Imp. from U.S.

143

143

0

140

0

140

Total Supply

5605

5605

6050

6203

6082

6167

MY Exports

2

2

4

2

4

2

TY Exports

2

2

4

2

4

2

Consumption and Residual

4350

4197

4374

4374

4334

4334

Ending Stocks

1253

1406

1672

1827

1744

1831

Total Distribution

5605

5605

6050

6203

6082

6167

(1000 HA) ,(1000 MT)