South Korea has been in the headlines lately with the Winter Olympics. However, U.S. exporters are increasingly excited with the country as it is the fifth largest market reaching over $6.8 billion in 2017 alone. With livestock, grains, and horticultural products leading the way, South Korea has also rebounded from a lean period, importing over $200 million in soybean oil and $600 million in all oilseeds and products. In particular, the soybean oil market has been a great success story for U.S. agriculture. South Korean imports of soybean oil have been largely supplied by price-competitive Argentina, followed by the U.S. and regional suppliers such as Vietnam and Thailand. Historically, the U.S. has maintained a relatively small market share, reaching 23% in 2015/16. In 2016/17 however, U.S. market share jumped to 45% which translates to an additional $80 million increase in exports compared to 2015/16. One of the major reasons for this increase is because end users are becoming more appreciative of the qualitative characteristics of U.S. soybean oil, such as taste and color. Most notably, the golden color of U.S. soybean oil is a key factor in U.S. products being preferred over Argentine, which have a red tint. Additionally, due to the U.S. – South Korea Free Trade Agreement, U.S. producers have an increasing edge in tariffs over their Argentine counterparts, as Argentina faces a tariff rate of 5% compared to the 2.2% for U.S. imports. The promising first quarter of Marketing Year 2017/18 coupled with the above mentioned favorable micro and macro economic factors suggest another strong year for U.S. ag exports to South Korea. Many traders inside the markets, believe how leaders in Washington elect to handle relations with their North Korean neighbors could have a deep impact on U.S. – South Korean trade relations for years to come, so we have to continue paying close attention. (Source: USDA, FAS –Oilseeds Report)
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