South Korea Agribusiness Report Q1 2013Published by: Business Monitor International Published: Dec. 19, 2012 - 87 Pages Table of Contents
AbstractSouth Korea's agricultural exports in 2013 are likely to continue to ride on strong demand, especiallyfrom South East Asian nations. In the first 10 months of 2012, farm exports grew 7.8% year-on-year toUS$670mn with the largest growth coming from South East Asian countries, of 22.4%. Shipments ofprocessed farm products expanded the most, at 9.1% while fisheries products and fresh foods rose 7.7%.Key Trends Wheat consumption growth to 2017: 26.9% to 5.7mn tonnes. Approximately 30% of thisdemand is accounted for by the livestock sector. A important driver of wheat demand over themedium term will be the growing substitution of wheat feed in animal compound feed due to therelative cheaper price of wheat compared to corn. Rice production growth to 2016/17: -6.3% to 4.0mn tonnes. The government is encouragingrice farmers to cultivate alternative crops under a three-year rice reduction programme runningthrough 2013. In addition, high rice stocks have created relatively low domestic prices and havediscouraged farmers from planting. Beef consumption growth to 2016/17: 20.0% to 823,300 tonnes. As the foot-and-mouthdisease issues in the beef sector are slowly fixed, beef consumption is likely to respondaccordingly. We expect growth owing to an increase in beef imports and the expectation thatconsumers will substitute beef for pork. 2013 real GDP growth: 3.0% year-on-year (y-o-y) (up from 1.9% in 2012; predicted toaverage 3.8% from 2012 until 2017). 2013 central bank interest rate: 2.75% (same as in 2012; predicted to average 3.3% from 2012until 2017). Industry Outlook Since reporting the record level of the national cattle herd in June 2012 at 3.5mn heads, stock hasremained high throughout the year despite government efforts to reduce cow numbers. For example, theslaughter of cows and heifers reach 63,400 heads in September which was the highest monthly slaughterin history. Indeed, the government has not only promised to slaughter 130,000 cows in H212 but it hasalso promoted local beef through discounts and promoting gift sets. However, prices of livestock (expectpoultry) have steadily declined especially in H212. The import price index for agriculture, livestock andfishery products fell 7.5% y-o-y in September. For livestock alone, product prices decreased by 3.8% inSeptember. Meanwhile, imports have also been declining in tandem. Beef imports in September were reported tohave fallen by 16% y-o-y with chilled and frozen imports decreasing by 16% and 14% respectively. Interms of country of origin, Australia and New Zealand's overall share remained the same at 50% and 11%respectively but the United States' market share had increase from 37% to 38%. Elevated imports will help South Korea maintain high levels of stocks and eventually inflate them toensure demand will be met amid surging global prices. As announced in September 2012, the country willstockpile about 500,000 tonnes of corn, wheat and soybeans overseas for feed use in 2014 after grainprices soared in recent months. South Korea will also boost state reserves for imported soybeans for fooduse to 71,000 tonnes in 2012/13 from 47,500 tonnes in 2011/12. These reserves will eventually reach90,000 tonnes in later years, according to governmental sources. In the longer term, we foresee little change in imports volumes from South Korea, as grain productionbalance should remain rather stable. The deficit is expected to reach 5.7mn tonnes to 2016/17 for wheat,compared with 5.1mn tonnes in 2011/12, while we forecast corn production deficit to stand at 8.7mntonnes, compared with 7.6mn tonnes currently. After a month-long ban on imports of US-originating rice, South Korea decided to lift the ban in Octoberafter tests showed that there is no significant risk for human consumption of rice tainted with arsenic.That said, the South Korean government did issue a statement saying that it would consider setting limitsfor all arsenic levels in rice. The US accounts for about 25% of the Asian nation's annual rice imports. Get full details about this report >> |
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