Lower world corn prices moves exports to S. Korea to next year

MANILA, Philippines - The country’s bid to export yellow corn to South Korea by yearend might be moved to early next year due to softening world corn prices and high freight costs, an industry official said late last week. "The United States is in its harvest season so prices are softening," Roger V. Navarro, president of the Philippine Maize Federation, Inc. (Philmaize), said in a telephone interview. For instance, prices of US corn have dropped to $173.15 per metric ton during the weekend from the record high of $378.91 four months ago. Moreover, the Korean Overseas Grains Investment and Development Co. has offered a buying price of $290-300 per metric ton of corn, lower than the $330-350 per metric ton expected by Philmaize, Mr. Navarro said. At the foreign exchange rate of P48, the Koreans will buy corn produce at P13.92-14.40 per kilo, lower than the expected P15.84-16.80 "That price is too low for us...we have to ship corn to Luzon from Mindanao because we do not have post-harvest facilities in Luzon," Mr. Navarro said in Filipino. The shipment will cost corn exporters $1,650-1,800 per 20-footer van containing 18-20 metric tons of produce, he added. Philmaize, a nationwide group representing the corn industry, announced early in September its plan of trial-shipping 40 container vans containing 30-35 tons of yellow corn to Korea before the end of the year given the low buying price of yellow corn set by the government. Early last month, the interagency government body on rice and corn hiked the buying price of yellow corn, used for animal feed, to P11.50 per kilogram from P10 per kilo, but this was P1.10 lower than Philmaize’s proposal of P13. Yellow corn makes up nearly two-thirds of the Philippines’ total corn production, while the rest is white corn, used as food. Mr. Navarro said his group would still negotiate to export "even with only 10 [20-footer] vans just [for us] to make sure that we can ship [to Korea]." "We are also after Korea’s investment in postharvest facilities and terminal silos that can be built in Luzon and Mindanao," he added. The country has four corn centers, all in Mindanao. Lack of post-harvest facilities account for up to 15% of yield losses. Industry and government officials assured that exporting yellow corn would not result in a shortage. "Prices of feed in the international market are going down ... feed millers can import corn substitutes in the form of feed wheat," Mr. Navarro said. In an interview two weeks ago, Ricardo M. Pinca, vice-president of the Philippine Association of Feed Millers, Inc., said the demand for animal feed slipped by 15-20% compared with last year because of slow growth in the livestock sector. "We will see to it that exporting corn will not compromise the requirement of the livestock and poultry sector for feeds," Dennis B. Araullo, assistant secretary of the Agriculture department and the national director of the Ginintuang Masaganang Ani Corn Program, said in a phone interview. There are 1.3 million hectares of fields available for the expansion out of the 2.6 hectares of corn plantation in the country, Mr. Araullo said. "When farmers see that corn prices are high [in the international market], they will be encouraged to plant more despite the high costs of fertilizers," he added. — N.J.C. Morales, BusinessWorld