Traders unfazed as S. Korea’s feed sector buys corn despite bird flu

Traders have responded coolly to news that South Korea is battling an outbreak of avian flu, with most agreeing that the...

Traders have responded coolly to news that South Korea is battling an outbreak of avian flu, with most agreeing that the situation is likely to be contained quickly and won’t impact the country’s recent corn buying appetite.

The highly-contagious bird flu started spreading across South Korea with strains found at a chicken egg farm in Yeoju, Gyeonggi Province earlier this week, prompting the government to impose an immediate standstill order for all poultry farms.

“The strain of the virus has not been verified, but if confirmed as highly pathogenic, about 1 million quails and ducks would have to be culled immediately,” the Korea Herald said in an article published this week.

Traders who supply corn and meals into the key destination market - with South Korea one of the world’s biggest corn importers - are watching the situation closely in case it triggers a deterioration in corn consumption as well as purchasing interest.

“It seems like bird flu is not a big deal yet, but the market is concerned of it and we will need to see if it impacts the demand side,” a South Korea-based trader said.

However, market participants are not overreacting, as bird flu is often a seasonal occurrence, coming every year in winter and often quickly contained by existing containment measures.

“It comes and goes, nothing special, poultry producers can manage its consequences”, another trader said, while the relative expensiveness of alternatives like feed wheat are likely to mean appetite for corn remains strong.

“Feed wheat is too expensive this year. Corn is by far the cheapest ingredient, feed producers maximise it in feed rations, current pace suggests nothing else but an increase in volumes,” he added, anticipating demand for corn to hold up.

South Korea’s feed importers have continued securing volumes for shipments in 2021, with 463,000 mt traded since the start of December, following a strong period in October and November when at least 2.5 million mt was booked by the country’s main importers.

Corn processing association Kocopia was the latest to buy, picking up a 60,000 mt cargo from Posco International at $250.25/mt on a CFR South Korea basis.

Local authorities are on alert though, remembering the outbreak between 2016-2017 that wiped out more than 38 million chickens, ducks and quails, with the government spending more than $3 million to help poultry farms recover.

For more information on South Korea’s corn buying, please see our Tender Dashboard.

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