Oilseeds and Products Annual 2012

An Expert's View about Cereals, Leguminous Crops, Oil Seeds in South Korea

Posted on: 23 Mar 2012

Soybean consumption in MY 2012/13 is forecast to remain steady at 1.3 million MT, of which 920,000 MT will go for crushing and 370,000 MT for food processing.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 3/2/2012 GAIN Report Number: KS1217 Korea - Republic of Oilseeds and Products Annual 2012 Annual Approved By: M. Kathryn Ting, Minister-Counselor Prepared By: Sunchul Choi//Michael G. Francom Report Highlights: Soybean consumption in MY 2012/13 is forecast to remain steady at 1.3 million MT, of which 920,000 MT will go for crushing and 370,000 MT for food processing. MY 2012/13 soybean meal consumption is projected to expand 50,000 MT to 2.35 million MT as the local hog industry recovers from the effects from the earlier Foot & Mouth Disease (FMD) outbreaks. Imports of U.S. soybean meal are expected to double during this period to 200,000 MT. Meanwhile, soybean oil consumption in MY 2012/13 is forecast to grow 9 percent to 500,000 MT because of rising bio-diesel demand. Commodities: Oilseed, Soybean Production: Soybeans account for about 70 percent of Korea?s total oilseed production, while sesame and perilla combined make-up about 25 percent of the total. The remainder largely consists of rapeseed and peanuts. The Korean Rural Economic Institute?s (KREI) conducted a nationwide planting intention survey of 649 soybean farmers from December 27, 2011-January 5, 2012. According to the survey results, MY 2012/13 soybean area is forecast to slightly decline to 77,234 hectares, down 615 hectares or 1 percent from the previous year?s actual plantings. This decline is in part due to strong domestic rice prices that are expected to cause some farmers who planted soybeans last year to switch back to rice. Using the KREI survey results as a benchmark, Post is forecasting MY 2012/13 soybean production to remain relatively unchanged from the previous year at 129,000 MT. In MY 2011/12, soybean production climbed to 129,394 MT, up 24,040 MT or 23 percent from the previous year because of the increased plantings and favorable weather conditions late in the growing season. The increase in production has put downward pressure on local soybean prices since last fall. See price series table below. In the future, soybean production is expected to hinge on the direction of the government?s rice reduction policy. In 2010, the government instituted a 3-year pilot rice reduction program (2011-13) to reduce the country?s oversupply of domestic rice by cutting annual production by 200,000 MT (40,000 HA). Under this program, farmers will be paid 3 million won ($2,600) 1 per hectare for planting soybeans and other crops instead of rice. These farmers will also continue to receive the 700,000 won ($632) per hectare rice area payment. Of note, soybeans are considered the most suitable crop to grow in converted paddy lands and farmers. In CY2011, government soybean purchases, which are made each year at a fixed price, stayed at zero for the second year in a row as farmers opted to sell their beans into commercial channels at higher prices. The government rate, which is unchanged since 2009, was set at 3,168 w/kg ($2.86), while the average wholesale soybean price during this period (Oct-Dec) was 5,700 w/kg ($5.15). The government has not hit its annual purchase target of 14,100 MT in years past since domestic prices have been so strong. Korea: Soybean Production 1 Applicable 2011 Averaged Korean Foreign Exchange Rate at 1,107 won per US$ Crop Year Area (ha) Yield (kg/ha) Production (mt) 2007 76,267 1,498 114,245 2008 75,242 1,760 132,374 2009 70,265 1,982 139,251 2010 71,422 1,470 105,345 2011 77,849 1,660 129,394 2012 1/ (f) 77,234 1,674 129,000 Source: Ministry for Food, Agriculture Forestry and Fisheries (MIFAFF) 1/ FAS Seoul forecast. Korea: 2012 Soybean Planting Intention Crop Year Upland (ha) Paddy Land (ha) Total (ha) 2011 65,040 12,809 77,849 2012 64,975 12,258 77,234 Growth Rate (%) -0.1 -4.3 -0.8 Source: Korea Rural Economic Institute (KREI) Note: Based on KREI telephone survey to 649 farm households for December 27, 2011-January 5, 2012. Korea: Oilseed Area and Production (Hectares and Metric tons) Crops MY 2010 MY 2011 Area Production Area Production Soybean 71,422 105,345 77,849 129,394 P /eanu 2ts 5,831 13,991 4,413 11,0001/ Sesame 27,154 12,703 26,549 12,5001/ Perilla 33,376 33,941 32,156 32,7001/ Total 138,601 165,980 140,967 185,5941/ Source: Ministry for Food, Agriculture Forestry and Fisheries (MIFAFF) Notes: 1/ FAS/Seoul estimates. 2/ In-shell Korea: Government Purchases of Soybeans Grown in rice paddy area Grown in upland area Quantity Quantity Total Purchase Year 1/ Price (KRW/Kg) (mt) Price (KRW/Kg 1/) (mt) (mt) 2006 3,526 10,931 3,107 2,112 13,043 2007 3,017 3,403 3,017 949 4,352 2008 3,017 1,891 3,017 1,025 2,916 2009 3,168 509 3,168 763 1,272 2010 3,168 0 3,168 0 0 2011 3,168 0 3,168 0 0 Source: Korea Agro-Fishery & Food Trade Corporation (aT) 1/ Price based on No. 1 grade of large-sized kernel Korea: Wholesale Prices of Domestic Soybeans (High Quality, Korean Won per Kg) Month Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec 2008 3,759 4,323 4,961 5,080 4,720 4,369 4,261 4,243 4,171 4,068 3,559 3,429 2009 3,441 3,554 3,694 3,711 3,707 3,703 3,712 3,717 3,721 3,719 3,679 3,659 2010 3,761 3,860 4,071 4,283 4,457 4,814 4,929 4,851 4,719 5,410 6,309 6,722 2011 7,027 7,121 7,185 7,250 7,244 7,163 7,080 6,971 6,855 6,145 5,581 5,320 2012 5,173 Source: Korea Agro-Fishery& Food Trade Corporation (aT) Applicable Exchange Rate (Korean Won per US$): 1,107 on average in 2011 Korea: Soybean Farm Gate Price Index Year Price Index 2001 87.6 2002 90.4 2003 104.6 2004 119.23 2005 100.0 2006 70.0 2007 86.3 2008 117.0 2009 113.9 2010 164.5 2011 182.4 Source: Statistics Korea (KOSTAT) Consumption: Soybeans account for the majority of oilseed consumption. Consumption in MY 2012/13 is forecast to remain unchanged from the current marketing year at 1.3 million MT, of which 920,000 MT will go for crushing and 370,000 MT for food processing use in items like tofu, soymilk and soy sauce. Future growth in overall soybean consumption is expected to be minimal given the maturity of the crushing and soy processing industries. Korea: Soybean Consumption for Crushing (Metric Ton) Month MY 09/10 MY 10/11 MY 11/12 October 70,800 92,200 72,460 November 66,100 80,020 61,140 December 69,830 90,200 63,015 January 78,573 93,840 Na February 70,580 73,380 Na March 75,240 81,810 Na April 79,780 76,660 Na May 68,330 53,570 Na June 76,880 83,120 Na July 76,630 74,680 Na August 81,620 66,130 Na September 92,200 53,550 Na Total 906,563 919,160 Na Source: Korea Soybean Processing Association Korea: Distribution of Soybeans for Food Manufacturing by the Korea Agro Fisheries & Trade Corp (aT) (Calendar Year, Metric Ton) Item\Year CY 2009 CY 2010 CY 2011 Soybean Curd 119,000 112,269 119,418 Soy Paste 41,600 39,741 39,557 Soy Paste/Soy Flour 4,500 4,307 4,272 Soy Milk 24,800 26,048 30,347 Soy Sprout 18,600 19,002 29,080 Others 1/ 300 301 305 Sub. Total 208,800 201,668 222,979 By product 2/ 24,000 26,622 30,418 Total 232,800 228,290 253,397 TRQ Allocation to End-Users -- Direct Commercial Purchases Soybean Curd 17,000 13,744 9,393 Soymilk 3,000 3,186 3,248 Soy-Paste/Red Pepper 3,700 2,976 4,821 Soy Sprout Assn. 10,000 9,998 10,000 Total 33,700 29,904 27,462 Soy-sauce (after crushing) 15,500 8,606 7,190 Grand Total 282,000 266,800 288,049 Source: Korea Agro-Fishery & Food Trade Corporation (aT) Note: Quantity is on the basis of cleaned soybeans. 1/ Government, military employees and others 2/ Feed Trade: Soybeans account for 83 percent of total oilseed imports of which approximately three-quarters are used for crushing. MY 2012/13 soybean imports are expected to remain unchanged from the current marketing year estimate of 1.2 million MT. Crushing Based on past demand, imports of crushing soybeans in MY2012/13 are forecast to remain largely unchanged from the current marketing year?s estimate at 920,000 MT. The majority of crushing beans come from the United States and Brazil, which each share about half of this segment of the market. Imports during the first three months MY2011/2012 (Oct-Dec) reached slightly more than 152,000 MT with an additional 220,000 MT contracted for delivery during Jan-May 2012. While import numbers during the first quarter of MY2011/12 were down, imports are expected to pick back up during the remainder of the marketing year. See trade and contract data tables for more details. The CY 2012 autonomous crushing soybean quota is 1.15 million with an adjustable in-quota tariff, which was cut from 3 percent to zero because of growing concerns about inflation. Under the KORUS FTA, the duty on crushing soybeans will immediately fall to zero. Korea: Crushing Soybean Imports by Origin (Unit: MT) Marketing Year (Oct/Sep) USA Brazil China Others Total 2005/06 252,985 599,309 0 61 852,355 2006/07 485,397 465,529 20 0 950,946 2007/08 374,940 552,887 20 0 927,847 2008/09 327,900 565,545 0 0 893,445 2009/10 492,776 431,715 0 0 924,491 2010/11 485,109 405,551 0 43,621 a/ 934,281 Source: Korea Customs Service (KCS) a/ Paraguay Contract Status of Soybeans for Crushing (as of January 2012) Contract Date Supplier Quantity (mt) Estimated Time of Arrival Origin May-24-2011 Cargill 55,000 Oct 2011 Brazil Aug.-17-2011 CJ Int?l 55,000 Nov 2011 Option 1/al Aug.-17-2011 CJ Int?l 55,000 Dec 2011 Option 1/al Oct.-28-2011 CJ Int?l 55,000 Jan 2012 Option 2/al Oct.-28-2011 STX 55,000 2/ Feb 2012 Optional Jan.-12-2012 Marubeni 55,000 Apr. 2012 USA Jan.-27-2012 CJ Int?l 55,000 May 2012 Brazil Total 385,000 Source: Local Crushing Industry: 1/ at seller?s option among Brazil, Paraguay or USA 2/ at seller?s option between Brazil and USA Food Use The Korea Agro-Fishery Food Trade Corporation (aT), the government?s state trading arm, controls the tariff rate quota (TRQ) for non-GMO food grade soybeans for processing. aT distributes the 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. Imports of food grade soybeans are forecast at 300,000 MT in MY2012/13, with the majority coming from the United States and China. The United States is expected to maintain 70 ? 80 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. Under its CY 2013 procurement plan, aT is intends to contract for 150,000 MT of soybeans this spring with delivery during the first half of CY 2013. Of this contracted amount, 25,000 MT will be made using farm contracts and 125,000 MT on basis trading contracts. Under its CY 2012 procurement plan, aT has or will purchase about 290,000 MT of soybeans, of which 260,000 MT is for food processing and 30,000 MT is for sprouting. Specifically, aT has already purchased 20,000 MT of soybeans under farm contracts and 130,000 MT on basis trading contracts for delivery during the first half of CY 2012. The remaining 110,000 MT will likely be purchased off the spot market sometime between Mar-Apr 2012 with delivery during the second half of CY 2012. Korea: Food Grade Soybean Imports by Origin (Unit: MT) Marketing Year (Oct/Sep) USA Brazil China Others Total 2005/06 260,626 21,302 56,409 0 338,337 2006/07 114,339 8,000 133,917 23,874 280,130 2007/08 60,311 15,890 218,905 227 295,333 2008/09 58,233 4,500 210,728 4 273,465 2009/10 215,932 4,000 47,546 5,255 272,733 2010/11 216,984 35 80,162 7,466 304,647 Source: Korea Customs Service (KCS) aT has requested the government to set the 2012 autonomous TRQ for U.S. #1 grade soybeans at 331,805 MT, which is above their announced purchase plan of 290,000 MT to give the trading agency some extra cushion. The CY2012 TRQ, which will likely be released at the end of March, is expected to include about 45,000 MT of soybeans for sprouting and 286,805 MT for food processing. The TRQ will also include a 30,000 MT allocation for direct import, which will effectively allow end-users to bypass aT and buy directly from the source. The in-quota tariff rate is 5 percent, while the out-of-quota tariff rate is a prohibitive 487 percent or 956 won per kg, whichever is greater. Under the KORUS-FTA, Korea will establish a zero tariff rate quota for 10,000 MT of food-grade identity-preserved soybeans in the first year of the agreement, 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 will be administered by an association of food-grade soybean processors and will give U.S. suppliers direct market access to these companies. In CY2011, aT distributed about 194,000 MT of imported food-quality soybeans (excluding soy by- products and sprouts) at an average price of 1,020 w/kg ($921/MT), which was unchanged from the previous year. During this period, the average international soybean price was $670/MT (CIF). Based on these figures, aT made an estimated $50 million in selling imported food grade soybeans to end consumers. Production, Supply and Demand Data Statistics: Soybean, Oilseed PS&D Oilseed, Soybean Korea, Republic of 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 100 71 100 78 77 Area Harvested 72 71 81 78 77 Beginning Stocks 52 52 18 63 62 Production 105 105 137 129 129 MY Imports 1,239 1,239 1,160 1,200 1,200 MY Imp. from U.S. 702 720 620 700 700 MY Imp. from EU 0 0 0 0 Total Supply 1,396 1,396 1,315 1,392 1,391 MY Exports 0 0 0 0 MY Exp. to EU 0 0 0 0 Crush 918 920 820 920 920 Food Use Dom. Cons. 410 370 425 370 370 Feed Waste Dom. Cons. 50 43 50 40 40 Total Dom. Cons. 1,378 1,333 1,295 1,330 1,330 Ending Stocks 18 63 20 62 61 Total Distribution 1,396 1,396 1,315 1,392 1,391 1000 HA, 1000 MT Soybean Import Trade Matrix Import Trade Matrix Country Korea, Republic of Commodity Oilseed, Soybean Time Period OCT/SEP Units: 1,000MT Imports for: 2009 2010 U.S. 709 U.S. 702 Others Others Brazil 436 Brazil 406 China 48 China 80 Total for Others 484 486 Others not Listed 4 51 Grand Total 1197 1239 Korea: Soybean Imports for Oct.-Dec. by Origin (Unit: MT) Soybean for Crushing (HS1201.00.1010) MY2011/12 USA Brazil China Others Total Oct. 2011 - 54,499 - - 54,499 Nov - 52,268 - - 52,268 Dec - - - 45,655 45,655 Subtotal 0 106,767 0 45,655 152,422 MY2010/11a/ 138,016 127,941 0 0 265,957 Soybean for Sprouting (HS1201.00.9010) MY2011/12 USA Brazil China Others Total Oct. 2011 80 - 148 38 266 Nov 510 - 3,519 - 4,029 Dec 3,600 - 6,495 - 10,095 Subtotal 4,190 0 10,162 38 14,390 MY2010/11a/ 4,260 0 8,327 20 12,607 Soybean for Food Processing (HS1201.00.9090) MY2011/12 USA Brazil China Others Total Oct. 2011 29,365 - 730 820 30,915 Nov 1,441 1,700 300 - 3,441 Dec 8,444 - 28,622 6,303 43,369 Subtotal 39,250 1,700 29,652 7,123 77,725 MY2010/11a/ 50,839 35 5,931 1,048 57,853 Soybeans Total MY2011/12 USA Brazil China Others Total Oct. 2011 29,445 54,499 878 858 85,680 Nov 1,951 53,968 3,819 - 59,738 Dec 12,044 - 35,117 51,958 99,119 Subtotal 43,440 108,467 39,814 52,816 244,537 MY2010/11a/ 193,115 127,976 14,258 1,068 336,417 Source: Korea Customs Service (KCS) a/ October ? December 2010 Korea: Oilseed Imports (Metric Tons, $1,000) MY 2009/10 MY 2010/11 Volume Value Volume Value Soybean 1,197,222 578,053 1,239,237 680,011 Peanuts, in shell 190 180 168 157 Peanut, shelled 336 419 506 806 Copra 991 737 1,421 924 Linseed 502 462 824 1,016 Rapeseed 39 69 44 86 Sunflower Seed 1,790 2,530 2,163 3,470 Cottonseed 1/ 109,934 34,476 123,433 36,053 Castor Bean 45 18 32 21 Sesame Seed 67,659 101,858 96,928 150,583 Mustard Seed 1,400 1,291 1,832 1,543 Safflower Seed 305 196 245 161 Perilla Seed 18,009 26,159 29,295 37,046 Others 4,360 6,822 5,873 8,528 Total 1,402,782 753,270 1,502,001 920,405 Source: Korea Customs Service 1/ mainly for animal feed Korea: Soybean Powder Imports (MT, $1,000) Country CY 2010 CY 2011 Quantity Value Quantity Value U. S .A 3,458 2,786 3,344 2,915 China 10,715 7,948 7,623 5,931 Australia 947 1,929 2,712 5,911 India 1,648 1,198 5,779 4,522 Others 240 548 84 307 Total 17,008 14,409 19,542 19,586 Source: Korea Customs Service Korea: Applied Tariff Schedule For Oilseeds (Percent) Commodity H.S. Code 2010 2011 2012 Soybean, Seed 1201.10.xxxx na na 3 Soybean, Crushing 1/ 1201.90.1000 3(0) 3(0) 3(0) Soybean, Feed 1/ 1201.90.2000 3(0) 3(0) 3(0) Soybean, Sprouting 2/ 1201.90.3000 3(5) 3(5) 3(5) Soybean, Food Grade 2/ 1201.00.9000 3(5) 3(5) 3(5) Peanuts, Seed, in shell 1202.30.1000 na na 40 Peanuts, Seed, shelled 1202.30.1000 na na 24 Peanuts, in Shell 3/ 1202.41.0000 40 40 40 Peanuts, Shelled 3/ 1202.42.0000 24 24 24 Copra 1203.00.0000 3 3 3 Linseed 1204.00.0000 3 3 3 Rapeseed 1205.xx.xxxx 10 10 10 Sunflower Seed 1206.00.0000 25 25 25 Cottonseed 6/ 1207.29.1000 3 3 (1) 2 (0) Sesame Seed 4/ 1207.40.0000 40 40 40 Mustard Seed 1207.50.0000 3 3 3 Perilla Seed 5/ 1207.99.1000 40 40 40 Castor Beans 1207.99.4000 3 3 3 Safflower Seed 1207.99.5000 3 3 3 Others 1207.99.9000 3 3 3 Source: Korea Customs Research Institute, Tariff Schedules of Korea. Note: The Seed Industry Act restricts imports of listed commodities for planting seed purposes. 1/ The number in parenthesis is the in-quota tariff rate assessed on 1.15 million tons of soybeans imported for crushing and feed purposes for CY 2012. 2/ An applied duty rate of 5 percent is applied to the food grade soybeans imported by the Korea Agro-Fishery & Food Trade Corporation (aT) under the WTO TRQ. The applicable TRQ will be set by the end of March 2012. Soybeans imported out-of-quota by private importers will be assessed a tariff rate of 487 percent or Korean won 956/Kg, whichever is greater. 3/ The in-quota amount is 4,907.3 tons on a shelled basis. Peanuts imported out-of-quota are assessed a tariff of 230.5 percent. 4/ The in-quota amount is 6,731 tons. Sesame imported out-of-quota is assessed a tariff of 630 percent or Korean won 6,660/Kg, whichever is greater. 5/ 40 percent or Korean won 410/Kg, whichever is greater. 6/ The number in parenthesis is the in-quota tariff rate assessed on 160,000 tons of cotton seed for feed in the CY 2012. Commodities: Meal, Soybean Meal, Rapeseed Production: Almost all of the vegetable meal produced in Korea is made from imported soybeans. There is also a very small amount (<1,000 MT) of locally produced rapeseed meal. MY 2012/13 demand for crushing soybeans will remain flat at 920,000 MT as crushing margins remain tight and demand steady. Demand is slightly below the country?s 1.0 million MT crushing capacity. Soybean meal production for MY 2012/13 is likewise forecast to hold steady at 730,000 MT with an extraction rate of 79.2 percent and crude protein content of 44 percent. There are only two soybean crushers: CJ Corporation and Sajo O&F Co Ltd. In an effort to strengthen their competitiveness against imported meal from South America and India, these companies have started producing dehulled Hi-pro soybean meal with 47.0 percent protein content by blending U.S. and Brazilian meal. In CY 2011, production of dehulled Hi-pro soybean meal with 47 percent protein was up slightly, accounting for 23 percent of total soy meal production. Local crushers plan to expand dehulled hi-pro production in the future. The breakdown of production by company and product follows. In CY 2011, CJ produced 47 percent protein dehulled meal and 45% protein meal in a ratio of 35:65, while Sajo produced 46 percent and 45 percent protein meal at a ratio of 50:50. Korea: Soybean Crushing Capacity (As of January 2011) Soybean Crusher Capacity (mt/day) Location Sajo O&F 1,000 Incheon CJ Corp 2,000 Incheon Total 3,000 Source: Soybean Crushing Industry Note: Day=24 hours processing basis for 330 days Consumption: 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 12 percent of the total. While there is room to increase the soybean meal inclusion rate in animal feed rations, overall usage is expected to stay relatively flat for the foreseeable future given rising competition from alternative proteins, such as DDGS, and palm kernel and copra meals. MY 2012/13 soybean meal consumption is forecast to increase 50,000 MT to 2.35 million MT as the local hog industry gradually recovers from the effects of the Foot & Mouth Disease (FMD) outbreaks in late 2010 and early 2011. Similarly, MY2011/12 soybean meal consumption is predicted to increase 70,000 MT to 2.3 million MT as the livestock sector continues to rebuild after the FMD crisis. The U.S market share of total soybean meal consumption is calculated at about 20 percent; this figure is based on the volume of meal produced from U.S. soybeans plus the amount of imported U.S. meal. U.S. market share is expected to increase in the future as the U.S. soybean industry continues to work with the local compound feed industry highlighting the benefits of U.S.de-hulled hi-pro meal. In fact, 34 feed mills used U.S. dehulled hi-pro meal in CY 2011. One constraint to future growth, though, is price. U.S. dehulled hi-pro soybean meal is about $10 per MT more expensive than South American meal. Rapeseed meal consumption for MY 2012/13 is forecast to stay around 300,000 MT. MY2011/12 consumption is expected to increase 15,000 MT to 300,000 MT as the livestock industry continues to recover from FMD. Sizeable volumes of imported copra and palm kernel meals are also used in compound feed production depending on the size of import volume. Trade: Soybean meal imports during MY 2012/13 are forecast to climb to 1.7 million MT, up 50,000 MT from current marketing year in order to meet greater demand from the recovering swine sector. Depending on U.S. price competitiveness, imports of U.S. soybean meal during this period are forecast to double to 200,000 MT. Meanwhile, based on contract information and expected feed demand, the MY 2011/12 import estimate is raised 70,000 MT to 1.65 million MT. See contract data table below for more details. Rapeseed meal imports during MY 2012/13 are forecast at 320,000 MT. India supplies almost 100 percent of rapeseed meal imports and is expected to remain the top supplier for the foreseeable future. Palm kernel and copra meal imports are each forecast between 400,000-700,000 MT in both MY 2011 and MY 2012, respectively. The CY 2012 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 CY2012 TRQ for DDGS is set at 920,000 MT with a zero percent in-quota import duty, down from 1 percent the previous calendar year. In order to curb domestic inflation, the Korean government has also expanded the autonomous zero duty TRQs for other vegetable protein meals such as cottonseed meal, copra meal, palm kernel meal, and cottonseed hulls. Under the Korean-ASEAN FTA, copra and palm kernel meals are imported duty free from South East Asian countries such as Indonesia, Malaysia and Philippines. Indian soybean meal is imported duty free under the Korea-India Comprehensive Economic Partnership Agreement (CEPA). As part of the KORUS FTA, Korea will immediately eliminate import duties on vegetable protein meals such as soybean meal (2304.00.0000), DDGS (2303.30.0000), and cottonseed meal (2306.10.0000). Export Korea exports some locally crushed soybean meal because imported meal is sometimes cheaper. Soybean meal exports for MY 2012/13 are forecast to remain unchanged from the current marketing year?s estimate at 50,000 MT. The major markets for Korean soybean meal are Japan, Indonesia, Malaysia, Cambodia and Vietnam. Korea: Soybean Meal Exports (Metric Ton) Country MY 08/09 MY 09/10 MY 10/11 Japan 57,104 42,389 57,323 Malaysia 45,450 5,500 6,272 Indonesia 8,200 11,515 6,600 Vietnam 5,500 15,300 0 Cambodia 208 528 1,584 Others 3 236 1,144 Total 116,465 75,468 72,923 Source: Korea Customs Service Production, Supply and Demand Data Statistics: Soybean Meal PS&D Meal, Soybean Korea, Republic of 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 918 920 820 920 920 Extr. Rate, 999.9999 1 1 1 1 1 Beginning Stocks 50 50 40 81 81 Production 733 729 640 730 730 MY Imports 1,658 1,634 1,730 1,650 1,700 MY Imp. from U.S. 179 175 200 100 200 MY Imp. from EU 1 1 1 1 0 Total Supply 2,441 2,413 2,410 2,461 2,511 MY Exports 72 72 50 50 50 MY Exp. to EU 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 Food Use Dom. Cons. 23 30 23 30 30 Feed Waste Dom. Cons. 2,306 2,230 2,297 2,300 2,350 Total Dom. Cons. 2,329 2,260 2,320 2,330 2,380 Ending Stocks 40 81 40 81 81 Total Distribution 2,441 2,413 2,410 2,461 2,511 1000 MT, PERCENT Soybean Meal Import Trade Matrix Import Trade Matrix Country Korea, Republic of Commodity Meal, Soybean Time Period OCT/SEP Units: 1,000MT Imports for: 2009 2010 U.S. 409 U.S. 175 Others Others Brazil 771 Brazil 782 India 97 India 185 Argentina 340 Argentina 490 China 97 China 1 Total for Others 1305 1458 Others not Listed 4 1 Grand Total 1718 1634 Source: Korea Customs Service (KCS) Rapeseed Meal PS&D Meal, Rapeseed Korea, Republic of 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 1 1 1 1 1 Extr. Rate, 999.9999 1 0 1 0 0 Beginning Stocks 10 10 3 8 8 Production 1 0 1 0 0 MY Imports 303 303 350 320 320 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 314 313 354 328 328 MY Exports 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 Industrial Dom. Cons. 46 20 46 20 20 Food Use Dom. Cons. 0 0 0 0 0 Feed Waste Dom. Cons. 265 285 305 300 300 Total Dom. Cons. 311 305 351 320 320 Ending Stocks 3 8 3 8 8 Total Distribution 314 313 354 328 328 1000 MT, PERCENT Rapeseed Meal Import Trade Matrix Import Trade Matrix Country Korea, Republic of Commodity Meal, Rapeseed Time Period OCT/SEP Units: 1,000MT Imports for: 2009 2010 U.S. 0 U.S. 0 Others Others India 190 India 303 China 99 China 0 Canada 22 Canada 0 Total for Others 311 303 Others not Listed 9 0 Grand Total 320 303 Source: Korea Customs Service (KCS) Korea: Soybean Meal Production 1/ (Metric Ton) Month MY 09/10 MY 10/11 MY 11/12 October 53,505 69,402 54,446 November 47,935 60,469 45,830 December 50,209 65,066 46,524 January 57,869 68,974 Na February 51,276 53,657 Na March 54,132 59,482 Na April 58,278 55,707 Na May 50,042 39,419 Na June 57,433 62,492 Na July 57,322 55,808 Na August 61,316 49,321 Na September 69,907 40,263 Na Total 669,223 680,059 Na Extraction Rate 73.82% 73.99% Na Source: Korea Soybean Processing Association 1/ based on crushers? applicable extraction rate Korea: Feed Ingredients Use for Animal (October/September Basis) Items MY 2009/2010 MY 2010/2011 1,000 MT Percent 1,000 MT Percent Total Grains and Grain Substitution 10,954 63.4 10,935 64.3 - Wheat 2,105 12.5 2,100 12.4 - Corn 6,361 36.9 6,073 35.8 - Others 2,488 14.0 2,762 16.1 Total Vegetable Protein 4,414 25.6 4,203 24.7 - Soybean Meal 1/ 2,176 12.6 2,059 12.1 - Rapeseed Meal 306 1.8 285 1.7 - Cottonseed Meal 5 0.0 5 0.0 - Palm Kernel Meal 596 3.5 636 3.7 -Copra Meal 523 3.0 366 2.2 -Sesame Meal 15 0.1 17 0.1 -Perilla seed Meal 5 0.0 4 0.0 -Corn Gluten Meal 86 0.5 86 0.5 DDGS 474 2.7 535 3.1 - Others 228 1.3 210 1.2 Total Animal Protein 128 0.7 139 0.8 - Fish meal 23 0.1 21 0.1 -Meat & Bone Meal 18 0.1 18 0.1 -Others 87 0.5 100 0.6 Total Others 1,759 10.3 1,710 10.2 TOTAL COMPOUND FEED 17,255 100.0 16,987 100.0 Source: Korea Feed Association 1/ include dehullled soybean meal Korea: Imports of Major Protein Meals (October/September) MY 2009/2010 MY 2010/2011 Volume(MT) Value(1,000$) Volume(MT) Value(1,000$) Soybean Meal 1,718,345 718,824 1,633,904 661,878 Rapeseed Meal 320,634 92,673 303,310 80,561 Fish Meal 46,298 73,556 37,550 63,170 Bone Meal 250 561 211 540 Cottonseed Meal 18,820 7,029 17,906 6,591 Sunflower Seed Meal 124 39 1,171 234 Copra Meal 566,635 78,050 387,173 82,359 Palm Kernel Meal 662,972 62,819 699,885 118,859 Corn Germ Meal 3,142 670 10,390 2,373 Others 242,351 26,291 281,502 41,170 Total 3,579,581 1,060,520 3,373,007 1,057,748 DDGS 508,491 122,939 556,557 150,079 Source: Korean Customs Service (KCS) Korea: Soybean Meal Imports for Oct.-Dec. by Origin (Unit: MT) MY 2011/12 USA Brazil Argentina India China Others Total Oct. 2011 100 66,322 37,358 3,061 76 80 106,997 Nov 112 113,921 54,862 2,098 158 119 171,270 Dec 100 60,878 48,870 2,467 312 1 112,628 Subtotal 312 241,121 141,090 7,626 546 200 390,895 MY 2010/11 a/ 2,058 294,916 184,039 19,971 200 180 501,364 Source: Korea Customs Service (KCS) a/ October ? December 2010 Korea: Soybean Meal Contracts under MY 2011/12 Arrival by Origin (Unit: 1,000 MT, as of February 2012) Estimated Time of Arrival USA SOAM India Total Oct. 2011 0 165 0 165 Nov 0 110 0 110 Dec 0 55 7 62 Jan. 2012 0 55 20 75 Feb 0 55 a/ 20 75 Mar 0 110 20 130 Apr 0 55 20 75 May 0 165 55 220 Total 0 770 142 912 Source: Local Traders a/ at seller?s option between USA and Brazil Korea: Compound Feed Production (October/September, 1,000 mt) Animal Type MY 2009/10 MY 2010/11 MY 2011/12 a/ Poultry 4,564 4,744 4,900 Swine 5,465 4,738 4,750 Cattle 5,915 6,116 6,100 Oth b/ers 1,233 1,367 1,400 Sub. Total 17,177 16,965 17,150 Aquaculture 114 109 100 Milk Substitute 60 45 70 Grand Total 17,351 17,119 17,320 Source: Korea Feed Association (KFA), MIFAFF a/ FAS/ Seoul forecast b/ include ducks, pet food, rabbit, horse, sheep, deer, quail etc. Korea: Applied Tariff Schedule for Oil Cake and Meals (Percent) Commodity H.S. Code 2010 2011 2012 DDGS a/ 2303.30.0000 5 (2) 5 (1) 3 (0) Soybean b/ Meal 2304.00.0000 1.8 (1) 1.8 (0) 1.8 (0) Peanut Meal 2305.00.0000 5 5 5 Cottonseed Me c/al 2306.10.0000 2 (1) 2 2 (0) Linseed Meal 2306.20.0000 5 5 5 Sunflower Seed Meal 2306.30.0000 5 5 5 Rapeseed Meal 2306.40.0000 0 0 0 Cop d/ra Meal 2306.50.0000 2 2 2 (0) P e/alm Kernel Meal 2306.60.0000 2 2 2 (0) Cottonseed Hull fo /r feed f 2308.00.3000 5 5 5 (0) Source: Korea Customs Service The figures in parentheses are the autonomous quota tariff rates for CY 2012. a/ The applied duty is assessed on the first 920,000 tons of residues of brewing or distilling dregs and waste. b/ The applied duty is assessed on the first 2.7 million tons of soybean meal. c/ The applied duty is assessed on the first 165,000 tons of cottonseed meal. d/ The applied duty is assessed on the first 200,000 tons of copra meal. e/ The applied duty is assessed on the first 200,000 tons of palm kernel meal. f/ The applied duty is assessed on the first 110,000 tons of cottonseed hull for feed. Commodities: Oil, Soybean Oil, Palm Production: Because of narrow price margins resulting from competition from South American oil, MY 2012/13 soybean oil production is forecast to remain unchanged from the current marketing year estimate of 167,000 MT. Consumption: Soybean oil accounts for about half of the country?s total oil consumption. 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 the second most consumed oil and 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 2012/13 is forecast at 500,000 MT, up 9 percent from the current marketing year?s estimate because of rising demand for bio-diesel production. Meanwhile, palm oil consumption during this period is forecast at 340,000 MT, up 6 percent from the current marketing year because of rising demand from the bio-diesel sector. In an effort to keep consumer prices under control, the government has continued cutting import tariffs on imported oils, including soybean oil. Local bio-diesel producers are expected to use more than 60,000 MT of soybean oil and 120,000 MT of palm oil in MY 2011/12. Trade: The biodiesel sector is the main driver behind rising soybean oil imports. MY 2012/13 soybean oil imports are forecast at 360,000 MT, up about 13 percent from the current marketing year?s estimate. Soybean oil imported from South America, particularly Argentina, is much more competitive in price than domestically produced soybean oil made from imported soybeans. In MY 2012/13, palm oil imports are projected to increase 7 percent to 340,000 MT mainly due to rising demand from the biodiesel industry. Palm oil imports for biodiesel are expected to reach 140,000 MT, up 17 percent from the current marketing year estimate because 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. For the first half of CY 2012, the in-quota tariff rate on an unlimited quantity of food grade soybean oil was held at 2.5 percent, down from the 5.4 percent base rate. Tariffs on other oils such as olive oil, sunflower oil, crude rapeseed oil, and grapes seed oil were dropped to zero to help keep consumer prices down. Meanwhile, palm oil has been imported under the country duty free because of the Korea- ASEAN FTA. Under the KORUS FTA, once implemented, Korea?s 5.4 percent duty on imports of crude soybean oil will 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 will eliminate the import duty on palm oil immediately. Korea: Soybean Oil Imports for Biodiesel MY 2009/10 MY 2010/11 Country Value(1,000$) Volume(MT) Value(1,000$) Volume(MT) Total 50,582 59,548 37,657 37,858 Argentina 42,189 49,507 37,657 37,858 Brazil 4,222 5,000 0 0 USA 3,622 3,951 0 0 Others 549 1,090 0 0 Source: Korean Customs Service (KCS) Production, Supply and Demand Data Statistics: Soybean Oil PS&D Oil, Soybean Korea, Republic of 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2010 Market Year Begin: Oct 2011 Market Year Begin: Oct 2012 USDA Official New Post USDA Official New Post USDA Official New Post Crush 918 920 820 920 920 Extr. Rate, 999.9999 0 0 0 0 0 Beginning Stocks 24 24 18 28 30 Production 168 173 148 167 167 MY Imports 300 300 300 320 360 MY Imp. from U.S. 26 26 10 30 40 MY Imp. from EU 0 0 0 0 0 Total Supply 492 497 466 515 557 MY Exports 29 29 10 25 25 MY Exp. to EU 0 0 0 0 0 Industrial Dom. Cons. 60 60 60 80 120 Food Use Dom. Cons. 385 380 385 380 380 Feed Waste Dom. Cons. 0 0 0 0 0 Total Dom. Cons. 445 440 445 460 500 Ending Stocks 18 28 11 30 32 Total Distribution 492 497 466 515 557 1000 MT, PERCENT Soybean Oil Import Trade Matrix Import Trade Matrix Country Korea, Republic of Commodity Oil, Soybean Time Period OCT/SEP Units: 1,000MT Imports for: 2009 2010 U.S. 73 U.S. 26 Others Others Argentina 228 Argentina 261 Brazil 10 Brazil 7 Total for Others 238 268 Others not Listed 7 6 Grand Total 318 300 Source: Korea Customs Service (KCS) Palm Oil PS&D Oil, Palm Korea, Republic of 2010/2011 2011/2012 2012/2013 Market Year Begin: Oct 2009 Market Year Begin: Oct 2011 Market Year Begin: Oct 2011 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 0 0 0 0 0 Area Harvested 0 0 0 0 0 Trees 0 0 0 0 0 Beginning Stocks 37 37 41 37 37 Production 0 0 0 0 0 MY Imports 284 284 280 320 340 MY Imp. from U.S. 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 Total Supply 321 321 321 357 377 MY Exports 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 Industrial Dom. Cons. 35 104 30 140 160 Food Use Dom. Cons. 235 180 250 180 180 Feed Waste Dom. Cons. 10 0 0 0 0 Total Dom. Cons. 280 284 280 320 340 Ending Stocks 41 37 41 37 37 Total Distribution 321 321 321 357 377 1000 HA, 1000 TREES, 1000 MT Palm Oil Import Trade Matrix Import Trade Matrix Country Korea, Republic of Commodity Oil, Palm Time Period OCT/SEP Units: 1,000MT Imports for: 2009 2010 U.S. 0 U.S. 0 Others Others Malaysia 258 Malaysia 254 Indonesia 23 Indonesia 29 Total for Others 281 283 Others not Listed 0 1 Grand Total 281 284 Source: Korea Customs Service (KCS) Korea: Domestic Production of Vegetable Oil 1/s (Metric Ton) Commodities MY 2008/09 MY 2009/10 MY 2010/11 Soybean Oil 168,891 155,900 173,200 Corn Oil 31,360 43,680 46,326 Sesame Oil 23,737 20,110 27,407 Rice Bran Oil 10,000 10,000 10,000 Rapeseed Oil 567 738 381 Perilla Seed Oil 19,560 18,596 25,294 Total 254,115 249,024 282,608 Source: Foreign Agriculture Service, Seoul, Korea 1/ FAS/Seoul estimates Korea: Soybean Oil Production (Metric Ton) Month MY 09/10 MY 10/11 MY 11/12 October 11,000 16,000 13,600 November 12,500 14,800 11,700 December 13,000 16,800 11,800 January 14,200 16,700 Na February 13,000 13,300 Na March 12,400 14,200 Na April 11,800 15,700 Na May 11,200 12,100 Na June 12,000 16,300 Na July 15,000 14,400 Na August 14,300 12,700 Na September 15,500 10,200 Na Total 155,900 173,200 Na Extraction Rate 17.20% 18.84% Na Source: Korea Soybean Processing Association (KSPA) Korea: Total Supply of Edible Oils (Metric Ton) Commodity MY 2008/09 MY 2009/10 MY 2010/11 Soybean Oil 435,139 473,890 473,387 Palm Oil 251,880 281,312 284,322 Corn Oil 33,780 45,784 46,335 Rapeseed Oil 46,962 62,638 91,968 Coconut Oil 57,611 59,458 61,212 Olive Oil 9,307 11,254 12,476 Cottonseed Oil 99 840 386 Sesame Oil 24,087 20,468 28,235 Rice Bran Oil 21,260 22,065 27,812 Perilla Seed Oil 20,121 19,024 25,954 Fish Oil 17,449 11,651 11,186 Sunflower Oil 14,487 20,690 18,237 Total 932,182 1,029,074 1,081,510 Source: Foreign Agriculture Service, Seoul, Korea Korea: Fats and Oils Imports (MT & US$1,000, Oct/Sep) Commodity MY 2009/10 MY 2010/11 Volume Value Volume Value Palm Oil 281,312 223,702 284,322 334,468 Tallow 95,697 71,502 76,712 81,467 Coconut Oil 59,012 52,610 60,558 108,507 Cottonseed Oil 840 1,077 386 529 Fish Oil 10,651 24,005 10,186 23,877 Soy Oil 317,990 275,188 300,187 349,793 Corn Oil 2,104 2,259 9 166 Rapeseed Oil 61,883 59,668 91,210 114,431 Palm Kernel Oil 6,776 7,211 1,315 7,091 Rice Bran Oil 12,605 14,694 17,812 26,688 Castor Oil 6,507 10,300 6,055 14,315 Linseed Oil 6,291 6,801 6,219 9,224 Sunflower Oil 20,690 28,855 18,237 33,026 Safflower Oil 49 274 105 399 Olive Oil 11,254 26,957 12,476 42,332 Jojoba Oil 60 701 46 873 Peanut Oil 25 97 41 214 Sesame Oil 358 1,258 828 2,490 Perilla Oil 428 986 660 1,280 Camellia Oil 13 205 22 353 Babassu Oil 2 32 8 88 Other Oil 21,145 63,884 14,446 51,638 Total 915,692 872,266 907,840 1,203,249 Source: Korea Customs Service (KCS) Korea: Soybean Oil Imports for Oct.-Dec. by Origin (Unit: MT) MY 2011/12 USA Argentina Brazil Vietnam Others Total Oct. 2011 8 28,484 3,321 0 206 32,019 Nov 8 16,668 0 9,479 149 26,304 Dec 0 27,342 0 8,013 2,294 37,649 Subtotal 16 72,494 3,321 17,492 2,649 95,972 MY2010/11 a/ 44 94,568 22 0 272 94,906 Source: Korea Customs Service (KCS) a/ October ? December 2010 Korea: Applied Tariff Schedule For Fats And Oils (Percent) Commodity H.S. Code General Rate 2011 2012 Lard 1501.00.10xx 3 3 3 Beef Tallow 1502.00.10xx 2 2 2 Other Tallow 1502.00.90xx 3 3 3 Fish Oil 1504.xx.xxxx 3 3 3 Soybean Oil for Food, Crude 1507.10.1000 5.4 5.4 (2.5) a/d/ 5 (2 d/.5 a/) Soybean Oil For Biodiesel, Crude 1507.10.2000 5.4 5.4 5 Soybean Oil for Other, Crude 1507.10.9000 5.4 5.4 5 Soybean Oil for Food, Refined 1507.90.1010 5.4 5.4 5 Soybean Oil For Biodiesel, Refined 1507.90.1020 5.4 5.4 5 Soybean Oil for Other, Refined 1507.90.1090 5.4 5.4 5 Soybean Oil, Other 1507.90.9000 8 8 8 Peanut Oil 1508.xx.xxxx 27 27 27 Olive Oil 1509.xx.xxxx 8 8 (0) a/ 5 (0) a/ Palm Crude Oil 1511.10.0000 3 3 3 Palm Oil 1511.90.xxxx 2 2 2 Sunflower Oil 1512.1x.xxxx 10 10 (0) a/ 5 (0) a/ Safflower Oil 1512.1x.xxxx 8 8 (4) a/ 5 Cotton Seed Oil 1512.2x.xxxx 5.4 5.4 5 Coconut Oil 1513.1x.xxxx 3 3 3 Palm Kernel Oil 1513.2x.xxxx 8 5 5 Rapeseed Oil, Crude 1514.11.0000 8 8 (0) a/ 5 (0) a/ Rapeseed Oil, Refined b/ 1514.19.xxxx 10 10 5 Rapeseed Oil, Other, Crude 1514.91.1000 8 8 (0) a/ 5 (0) a/ Linseed Oil 1515.1x.xxxx 8 8 5 Corn Oil 1515.2x.xxxx 8 8 (0) a/ 5 Castor Oil 1515.30.xxxx 8 8 8 Tung Oil 1515.40.xxxx 8 8 8 Sesame Oil c/ 1515.50.xxxx 40 40 40 Perilla Seed Oil 1515.90.1000 36 36 36 Other, Crude 1515.90.xxxx 8 8 (0) a/e/ 5 (0) a/e/ Source: Korea Customs Research Institute, Tariff Schedules for Korea a/ The figure in parentheses is autonomous quota tariff rate assessed on the unlimited vegetable oils imported for the first half of the calendar year. b/ under HS Code 1514.19.1000, 1514.19.9000 and 1514.19.9000. c/ In-Quota tariff rate. Quota is 668 tons. The out-of-quota tariff rate is 630 percent or 12,060 Won/Kg, whichever is greater. d/ food purpose e/ Grape seed oil
Posted: 23 March 2012

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