Domestic Food Prices Up 1.5% and Compound Feed Price Index Rises 1.3% in Q2
[Sejong=Asia Economy Reporter Kim Hyunjung] As the prices of imported grains rose in the second quarter of this year, it is expected that domestic food prices, which use these as raw materials, will also increase.
According to the Korea Rural Economic Institute on the 6th, the Agricultural Outlook Board forecasted in the April issue of 'International Grains' that the import unit price of grains in the second quarter will rise by 8.9% and 8.1% compared to the previous quarter, reaching 109.4 points for food use (Korean import price, KRW basis) and 107.6 points for feed use, respectively. This was influenced by the continuous rise in international grain prices since last winter, as well as the upward trends in the KRW/USD exchange rate and maritime freight costs.
Last month, the import unit prices for food grains were recorded at $282 per ton for wheat, $265 per ton for corn, and $499 per ton for oilseed soybeans. These figures represent increases of 1.7%, 1.3%, and 1.6% respectively compared to the previous month. During the same period, the import unit prices for feed grains were $267 per ton for wheat, $247 per ton for corn, and $440 per ton for soybean meal, rising by 5.8%, 5.9%, and 5.7% respectively.
Regarding maritime freight, the Baltic Dry Index (BDI) in March was 2005 points, up 33.7% from the previous month and 148.2% compared to the average year. The Cape Freight Index (BCI) for the same month was recorded at 2020 points, increasing 31.5% from the previous month and 237.3% from the average year.
Overseas investment banks forecast the KRW/USD exchange rate in the second quarter to be 1,121 KRW per dollar, up 0.7% from the previous quarter, while IHS Global Insight expects it to rise to 1,136 KRW, a 2.0% increase. As the import prices of international grains, the main raw materials for food, rise, domestic food prices will face upward pressure. Accordingly, the Agricultural Outlook Board predicted that the domestic food price index in the second quarter will rise by 1.5% from the previous quarter to 111.7 points, and the compound feed price index will increase by 1.3% to 108.2 points.
The production and consumption volumes of major grains this year are generally expected to increase compared to last year. The expected growth rates in production and consumption compared to last year are 1.6% and 4.0% for wheat, 1.4% each for corn, 7.2% and 4.3% for soybeans, and 1.4% and 1.3% for rice.
The international grain futures price index for the second quarter is estimated to be 137.3, similar to the previous quarter's 137.8. While the strong dollar and improved winter crop yields tend to lower international grain futures prices, concerns over supply disruptions due to adverse weather in South America are expected to limit the decline, the institute observed.
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