Thu, 30 Jan 2014
SOUTH KOREA - The Korean government has announced the rice purchasing plan for the 2014 Minimum Market Access (MMA) agreement. Under the 2014 MMA, Korea plans to purchase its commitment of 408,700 MT of rice (milled basis), up 20,347 MT, an increase of approximately 5 per cent over last year. The US is expected to supply from 120,000 to 130,000 MT, or roughly 29-32 per cent of the total MMA volume.
The Korean government has announced the rice purchasing plan for the 2014 Minimum Market Access (MMA) agreement. Under the 2014 MMA, Korea plans to purchase its commitment of 408,700 MT of rice (milled basis), up 20,347 MT, an increase of approximately 5 per cent over last year.
The 2014 MMA quota is divided into the MFN global quota (GQ) of 203,472 MT and the country specific quotas (CSQ) totaling 205,228 MT. The GQ is further allocated by rice variety: 21.3 per cent to medium grain, 22.9 per cent to short grain, 9.8 per cent to long grain and the remainder to optional varieties. The United States is expected to supply from 120,000 to 130,000 MT, or roughly 29-32 per cent of the total MMA volume. The anticipated US share is calculated by adding the GQ of 43,270 MT allocated to medium grain as well as some portion of optional varieties allocated under GQ, to the 50,076 MT of US CSQ.
According to the Korea Agro-Fisheries & Food Trade Corporation (aT), its tendering process is expected to be completed earlier than previous years. They intend to conclude purchasing in the first half of this year in order to finalize delivery of most of the 2014 MMA by the end of the year.
Looking at the 2014 MMA in its entirety, Korea will import 122,610 MT of table rice and 286,090 MT of food processing rice. While both of these amounts continue to grow each year, the per centage of table rice is fixed at 30 per cent of the overall MMA. Refer to Table 2 to see how volumes have changed over time.
This year’s GQ is 203,472 MT, up 20,348 MT from last year. The GQ is generally for processing rice and is usually divided based on type: short, medium, or long grain rice. This year, short grain (SG), medium grain (MG), long grain (LG), optional variety between SG and MG, and broken rice will represent 21, 23, 10, 30 and 16 per cent of the GQ, respectively. The optional variety has included some milled rice for table purpose since 2013. The United States and Australia are the primary suppliers of MG rice to the Korean market, while China supplies all SG rice. India and Southeast Asian countries dominate most of the LG quota.
The optional variety allocation between medium and short grain rice consists of 21,090 MT of milled rice for table purpose and 40,000 MT (milled) of brown rice for processing purpose. The 21,090 MT of milled rice that the Korean government has allocated under the global quota offsets the decrease in table rice portion of Chinese CSQ which has suffered a slow demand in selling at auctions since 2008.
The aggregate CSQ volume remains fixed each year at 205,228 MT. The United States, Australia, Thailand and China each have CSQs. These quotas are comprised of both processing and table rice. Although the individual CSQs are fixed, the volume of table rice increases each year with an offsetting reduction in the volume of processing rice. Under the 2014 CSQ’s, Korea will purchase 101,520 MT of table rice (see table 5), up 5 per cent from the previous year.
The 2014 US CSQ, totaling 50,076 MT, is made up of 44,507 MT of table rice and 5,569 MT for processing. The US table rice allocation of 44,507 MT compares to 42,291 MT in 2013, a 5 per cent increase in response to a greater demand of US medium grain in the Korean consumer market. The per centage of the US CSQ allocated to processing has consequently been reduced to 5,569 MT or 28 per cent of the total CSQ.
The increased table rice allocation for the United States is attributed to a reduced allocation of Chinese and Thai rice for table purpose due to a lack of consumer confidence. Thai long grain table rice has a very limited demand in Korea and has been re-allocated based on local market conditions. Chinese table rice has also undergone slow auctioning to retail markets. Due to the aforementioned market conditions, the US table rice allocation under the 2014 MMA is 19,736 MT higher than it would have been otherwise (see table 5). Assuming that US bidders win 21,090 MT of table purpose tenders under the global quota with optional biddings of SG/MG, US medium grain milled rice for table purpose could exceed 65,000 MT, or 54 per cent of total table rice.
Korea continues to designate US table rice by USDA No. 1 and No. 3 grades, despite calls from both industry and USG for the entire allocation to be designated as USDA No. 1. According to the US rice industry, No. 3 grade table rice is not produced in the United States and US suppliers are reportedly selling USDA No. 1 grade rice as if it were No. 3 grade rice. However, aT and MAFRA continue to implement a 90-10 ratio to meet market demand for both USDA No. 1 and No. 3 grades in Korea respectively (see table 6).
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