A long-term boost to the country's pork imports, mainly from the United States, could support U.S. hog futures <0#2LH:> already at record highs partly on the back of potential Korean demand.
Pork shipments into Asia's No.4 economy may rise by 20 to 30 percent from last year's 290,000 tonnes after nearly a third of the pig herd was culled, and the country lowered tariffs on meat imports in an effort to contain food inflation.
"When one removes that many animals from their domestic herd, it would suggest that it's going to take, in the case of swine, a couple of years to come back," said Martin Rice, executive director of Canadian Pork Council.
Foot-and-mouth started on Nov. 28 and snowballed to 140 cases in eight provinces within two months, triggering a cull of 2.8 million pigs and nearly 150,000 cattle.
"As the number of sows fell to 700,000-750,000 from last September's 980,000, it will be hard for hog population to rise by the end of 2011," Korea Rural Economic Institute said in a report.
Lower Tarriffs to Boost Imports
South Korea earlier this month dropped its 25 percent tariff on up to 60,000 tonnes of pork to be imported through June to ease supply and try contain prices that are at their highest since at least 2005.
A finance ministry official said Korea may expand the volume of tariff-free port imports if prices continue to shoot up, as consumer inflation in January jumped to a higher-than-expected 4.1 percent, above the central banks inflation target.
Rich Nelson, an analyst at Allendale Inc in McHenry, Illinois, said: "We think we'll be trading good news from South Korea for the next two to three months."
"One thing we had been concerned about was that it would not be extended (the slashing of the tariff), and that the 60,000 metric tons might be it," Nelson said.
Korean swine farmers strongly opposed the government's tariff reduction, saying it threatened to destroy the domestic industry.
US Pork Favoured
South Korea expects a surge in meat demand for the five-day Lunar New Year holidays starting on Feb. 2, its biggest holiday.
The government keeps assuring consumers that meat from foot-and-mouth infected animals is not harmful to humans.
But consumers increasingly opt for imports, which cost less and look cleaner as all local pigs and cattle have been vaccinated against foot-and-mouth, industry sources and local media said.
While U.S. January pork export results are not yet available, cash sources and traders said South Korea has likely bought 60,000 tonnes or more of U.S. pork since the start of the year.
Chicago Mercantile Exchange April lean hogs futures on Monday touched a high of 94.525 cents per lb, the highest price ever for a second position.
The U.S. is the largest exporter of pork and poultry to South Korea, while Canada is the second-largest pork exporter.
Tim McRae, an economist at Meat & Livestock Australia, which oversees the Australian livestock industry, said U.S. sales to South Korea had already been picking up because of the weak dollar and the shipment of select cuts into that market.
The Korean won has gained 10 percent against the U.S. dollar in the past six month .
To Slow Feed Imports, Canadian Beef Talk
The massive slaughter of animals against foot-and-mouth and bird flu in South Korea will slow grain imports in the world's No.3 corn importer.
Feedmakers, who are usually active buyers, had issued only one soybean meal tender for feed since mid-December, as they shied away from surging international grain prices.
But it has been a boon for small cap companies involved with marketing imported meat and fish and producing disinfecting materials.
Shares of Dongwon Fisheries jumped by 65 percent over four sessions in mid-January to a record high, before pulling back, while Choong Ang Vac (CAVA
