South Korea: New Protein Standards Impact Soybean Meal Imports
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South Korean Oilseed Meal market is mature with stable demand, and annual feed ingredient use for compound feed production is around 21 MMT. Nearly all imported and domestically produced Soybean Meal is used in compound feed production, and consistent availability makes it popular with feed millers. Soybean Meal is the second most widely used ingredient in compound feed production after corn, accounting for 10.8 percent of total compound feed production in MY 2021/22.
MAFRA revised the standards for significant feedstocks to limit crude protein (CP) content in December 2021 as part of national efforts to achieve carbon neutrality by 2050. From July 2022, the maximum allowance of CP percentage in swine feed was reduced by 1-3 percent points (revised to 13 – 20 percent, previously 14 – 23 percent) varying across the swine lifecycle. These changes to swine feed composition directly led to reduced Soybean Meal demand. The total Soybean Meal consumption estimate for MY 2021/22 is revised to 2.5 MMT following a rapid decrease in consumption starting from July 2022, when the revised standards went into force. Feed ingredient use for compound feed production of Rapeseed Meal and Palm kernel Meal increased from October to December 2022 compared to the previous year to fulfill demand driven by more competitive import prices.
As a result of the above factors, FAS/Seoul forecasts MY 2023/24 total Soybean Meal domestic consumption will remain below 2.5 MMT, slightly reduced from the prior year but maintaining the largest share of total Oilseed Meal consumption as the primary source of feed ingredients. Total Rapeseed Meal domestic consumption in MY 2023/24 is forecast to increase to 0.43 moderately MMT, replacing some portion of Soybean Meal use. MY 2022/23 consumption is revised to 0.40 MMT, slightly increased from MY 2021/22.
Oilseed Derivatives Trade in South Korea
FAS/Seoul forecasts MY 2023/24 total Soybean Meal imports will be 1.7 MMT, slightly reduced from MY 2022/23 due to reduced demand caused by the revised protein content standards. Because Korean feed millers prefer Soybean Meal for its ready availability and as an essential source of protein, Soybean Meal imports are expected to remain within a 35 – 40 percent market share of total Oilseed Meal imports.
Considering the leading suppliers of other Meals are developing countries with growing economies and gradually increasing domestic consumption (India for Rapeseed Meal, Malaysia and Indonesia for Palm kernel Meal), the imports of other Meals are expected to continue rising but with a limited growth rate. The United States will likely remain a minor supplier of Soybean Meal to Korea with lower priced Brazilian Meal are taking the dominant share. Rapeseed Meal imports during MY 2023/24 are forecast to remain around 0.4 MMT, a slightly increased from MY 2022/23.
The 2023 autonomous Soybean Meal WTO TRQ is set at 2.45 MMT with a zero percent in-quota import duty, unchanged from the previous year. Korea also maintains an autonomous zero-duty TRQ for other vegetable protein Meals, such as cottonseed hulls, to support the livestock industry. TRQ volumes for copra Meal and Palm kernel Meal were eliminated when the zero duty under the Korean-ASEAN FTA was implemented.
Under the KORUS FTA, Korea eliminated import duties on U.S.-origin vegetable protein Meals such as Soybean Meal (Harmonized Tariff Schedule (HTS) code 2304.00.0000), distillers dried grains (DDGS) (2303.30.0000), and cottonseed Meal (2306.10.0000) beginning March 15, 2012. Under the Korean-ASEAN FTA, Korea imports copra and Palm kernel Meals duty-free from Southeast Asian countries such as Indonesia, Malaysia, and the Philippines. Indian Soybean Meal is imported duty-free under the Korea-India Comprehensive Economic Partnership Agreement (CEPA).
According to AgFlow data, South Korea imported 179,600 tons of Soybeans from Brazil in June 2023, followed by the US (1,763 tons). Korea exports some locally crushed Soybean Meal. Soybean Meal exports for MY 2023/24 are forecast to remain unchanged from the current marketing year’s estimate of 0.05 MMT. The major market for Korean Soybean Meal is from Japan, followed by Vietnam.
Other sources: USDA
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