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Increased livestock production keeps South Korean feed grain demand strong

Published on 19 January, 2010, Last updated at 23:40 GMT
Increased livestock production keeps South Korean feed grain demand strong

South Korea - Demand for feed grain in South Korea, Asia’s biggest buyer after Japan, will be sustained this year after climbing on increased livestock production, said an executive at the top buying group.

Consumption of corn and wheat for animal feed in the country, which imports virtually all of its needs, increased 11 percent last year to 8 million metric tons as farmers boosted livestock output and meat imports dropped, said Kim Chi Young, director in charge of grain purchases at the Korea Feed Association, which buys about 70 percent of imports. An outbreak of foot-and-mouth disease may be a “swing factor”, he said.

Demand from Korea may support wheat and corn in Chicago, which have tumbled 5 percent and 9.6 percent this year on increased global supplies. Meat imports declined last year as the financial crisis squeezed financing for small- and medium- sized importers, Kim said in an interview. Imports of beef, pork and chicken fell 9.2 percent to 418,177 tons in the first 11 months, data from the Korea Meat Trade Association show.

“While the global financial crisis hit other industries hard, the livestock sector was relatively better off as the higher output illustrates,” Kim said yesterday. “Demand may be resilient this year as well as the economy recovers.”

South Korea’s economy will expand 4.5 percent in 2010 after growing 0.25 percent in 2009, the International Monetary Fund said Dec. 8. The nation used 6.2 million tons of corn and 1.8 million tons of wheat last year to make so-called compound feed for livestock, Kim said. Consumption of corn and wheat may be largely unchanged this year, he said.


“Foot-and-mouth disease is a swing factor,” Kim said. “If the disease is contained early, it won’t have much impact. Otherwise, that may affect” demand, he said.

South Korea, the world’s third-largest corn buyer, reported this month its first outbreak of foot-and-mouth disease in eight years. The country culled a total of 160,155 cows and pigs because of an outbreak in 2002, incurring damage of 143.4 billion won ($128 million).

The foot-and-mouth virus is one of the most contagious diseases and can have high mortality rates in young animals, according to the World Organization for Animal Health in Paris.

Output of compound feed, produced with various raw materials including corn, wheat and soybean meal, may climb about 2 percent this year from an estimated 16.5 million tons last year, Kim said. Production gained 2 percent and prices of compound feed declined 25 percent in 2009, he said.

Korea Feed, which has 41 members including Cargill Agri Purina Inc. and CJ CheilJedang Corp., accounts for about 70 percent of South Korea’s feed grain imports.

by Sungwoo Park - Bloomberg


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