South Korea, the world’s third-biggest buyer of corn, more than halved imports from the U.S. as it turned to cheaper suppliers led by Brazil and Argentina.
Shipments of American corn tumbled to a seven-year low of 2.84 million metric tons last year, from 6.02 million tons in 2011, according to data on the Korea Customs Service’s website today. Imports from Brazil jumped to 1.96 million tons from 122,704 tons, while purchases from Argentina rose to 1.08 million tons from 1,957 tons, the data show.
Corn surged to a record $8.49 a bushel in Chicago on Aug. 10 last year as drought ravaged crops in the U.S., the top exporter. Prices then tumbled 18 percent by the end of the year as U.S. exports slowed and buyers sought cheaper supply. Goldman Sachs Group Inc. reiterated yesterday its forecast that corn will rise to $8.25 a bushel in three months, saying better U.S. weather is needed for a recovery in the next crop.
“Korean buyers last year shunned U.S. supplies because of the price surge triggered by the drought, and, coincidently, Latin America had a bumper crop,” Lee Tae Woong, a deputy general manager at Nonghyup Feed Inc., the nation’s biggest feed-grain buyer, said in a telephone interview today. “We expect buyers to continue to seek non-U.S. supplies this year.”
Corn for March delivery was little changed at $7.245 a bushel on the Chicago Board of Trade at 3:40 p.m. in Seoul. The price is up 3.7 percent this year after climbing 8 percent last year, the fourth straight yearly advance.
U.S. corn supply accounted for 35 percent of South Korea’s corn imports in 2012, the lowest level since 2005 and down from 78 percent in 2011 and 85 percent in 2010, customs data show.
The import cost of U.S. corn was $328 per ton last year, compared with $297 a ton for Brazil and $304 a ton for Argentina, the customs data show. Corn from the Ukraine cost $309 a ton. The price gap between U.S. and South American corn widened to as much as $50 a ton during the year, Nonghyup’s Lee said.
“Farmers in Brazil and Argentina may keep boosting corn output as prices remain high,” Lee said. “In the longer term, Korean buyers will continue diversifying import sources, and it might be difficult to see the U.S. regaining 80 to 90 percent share.”
Brazilian corn and soybean shipments from Paranagua, the country’s biggest grains and oilseeds port, will rise as much as 14 percent this year on large crops, the port said earlier this month. Argentina’s corn crop may jump 21 percent to a record 25.5 million tons this year after warm, dry weather since the end of December helped planting of the grain, the United Nations’ Food & Agriculture Organization said on Jan. 14.
Korea’s corn imports rose to 8.22 million tons, or $2.6 billion, in 2012 from 7.76 million tons in 2011, the customs data show. Shipments from Ukraine jumped to 897,339 tons from none. The Asian nation’s feed-corn purchases increased to 6.04 million tons from 5.67 million tons, the data show.