Today's Date:  Thursday, September 13, 2012

1. BILATERAL/MULTILATERAL ISSUES

FTAs drive up wine imports from U.S., Europe [English, OYS]

http://view.koreaherald.com/kh/view.php?ud=20120910001309

Korea’s imports of wines from the United States and Europe surged on free trade deals with the two major economies despite an economic slump here, industry data showed Monday.
According to the data by the Korea Wines & Spirits Importers Association, imports of American wines during the January-July period rose 19.4 percent from a year earlier to $8.63 million. Wine imports from Spain and Germany jumped 19.7 percent and 19.9 percent, respectively, on-year over the same period, while the amount of imported German wines surged 28.9 percent on-year. Korea bought 1.73 million liters of French wines over the seven-month period, down 10.1 percent on-year, but the value of the imported French liquor rose 9.8 percent to $23.85 million. Korea’s free trade agreement with the European Union took effect in July last year, with the Seoul-Washington pact implemented in March this year. “Expensive French wines are still in high demand here, but importers turned their eyes to other countries under the FTA effect to buy cheaper ones,” said an industry official. Market insiders said wines from the U.S. and European countries also saw their market shares gain ground in the Korean market, as they benefited from the FTAs. Imports of Chilean wines fell 3.5 percent on-year, with a market share of 21.7 percent as of July, down from 24.1 percent from a year ago. Korea also signed a free trade deal with Chile, which was implemented in 2004. French wines, however, had a market share of 30.5 percent as of July, up from 29.7 percent a year earlier, and U.S. wines took up 9.9 percent from 11 percent, according to the data. “Thanks to tariff cuts under the FTAs, prices of European and American wines lowered by some 10 percent, and a growing number of Korea customers have been tasting a variety of new wines from different countries,” said the official. (Yonhap News)

2. ECONOMIC ISSUES

Korea’s producer prices rebound in Aug. [English, OYS]

http://view.koreaherald.com/kh/view.php?ud=20120910001308

Korea’s producer prices rebounded in August from the previous month as oil costs and agricultural product prices increased, the central bank said Monday. The producer price index, a barometer of future consumer inflation, rose 0.3 percent last month from a year earlier, compared with a 0.1 percent on-year fall in July, according to the Bank of Korea. July marked the first month in nearly three years that producer prices dropped on-year. Compared with the previous month, the index climbed 0.7 percent in August after falling for the third consecutive month in July. The BOK said gains in agricultural product and energy costs raised the country’s producer prices last month. Crop prices rose 5.7 percent, extending their gain to four straight months, with fruit prices spiking 16.9 percent on-year, the BOK said. Utility costs surged 7.8 percent in the cited period, following the government’s decision to raise electricity rates early last month. Despite marginal rises in producer prices, more analysts forecast that the BOK will likely cut the key rate to 2.75 percent on Thursday. The central bank froze the rate at 3 percent last month after delivering a surprise rate cut in July to shield the local economy from the protracted eurozone debt crisis. The country’s consumer prices rose 1.2 percent on-year in August, the slowest clip in more than 12 years, amid government efforts to keep inflationary pressure down. August’s consumer inflation was well below the central bank’s target band of 2-4 percent for 2010-12. (Yonhap News)

3. GRAIN & OILSEED ISSUES

Grain prices rise, and that threatens the whole world [English, OYS]

[SERI FOCUS] ‘Priority should be on households that spend the most on food and are vulnerable to agflation.’

http://koreajoongangdaily.joinsmsn.com/news/article/article.aspx?aid=2959229&cloc=joongangdaily|home|newslist2

Droughts and abnormally high temperatures in major grain producing areas of the U.S., Russia and Brazil have sharply reduced crop yields, threatening to trigger the third global food crisis in the past five years. In the latest round, the epicenter is the U.S. Midwest, the world’s No. 1 grain producing region. Price movements of grains are increasingly synchronized, and the leap in prices is happening when the global economy is in a downward cycle, unlike the food crises of 2007-8 and 2010-11. bThe U.S. Department of Agriculture forecasts a 2.7 percent year-on-year decline in global grain production in 2012-13, meaning that harvests will fall by 40 million tons, or 1.7 percent of world consumption. Wheat production is expected to drop 4.7 percent, corn 3.2 percent and rice 0.4 percent. The crop problems have sent commodity markets on a tear. Between the end of May and end of August, prices of corn jumped 44 percent, wheat 38.2 percent and soybeans 31.1 percent. The prices of corn and soybeans have hit record highs, surpassing the crisis in 2008 and 2011.

4. MARKETING ISSUES

Costco Wholesale Korea under fire for doing business on Sunday [English, OYS]

http://view.koreaherald.com/kh/view.php?ud=20120911000316

The South Korean unit of U.S. retail giant Costco Wholesale Corp. has resumed operations on Sunday at its outlets across the country, a move that local industry officials claim violates Seoul‘s policy of restricting the business of large retailers.Local authorities in South Korea have prohibited large retailers from doing business on the second and fourth Sunday of every month to help protect mom-and-pop stores.South Korea’s largest retailer E-Mart and other retail chains later won injunctions in several local courts to delay the implementation of the ban, paving the way for them to resume operations on the second and fourth Sunday of every month.However, Costco Wholesale Korea Ltd. resumed its business at its seven warehouses in South Korea on Sept. 9, even though it did not take part in the legal action against the government‘s new restrictions.Costco Wholesale said on its Web site that it will close only on New Year’s Day, Lunar New Year‘s Day and the Chuseok holiday, the Korean equivalent of Thanksgiving Day.Costco Wholesale has said it was opposed to the restriction of its operations in South Korea.

Lotte Mart Opens 2nd ‘Vic Market‘ Store in Hwasung-si [Korean, OSY]

http://www.yonhapnews.co.kr/economy/2012/09/11/0318000000AKR20120911213700003.HTML

Summary: Lotte Mart announced that its second ‘Vic Market’ store would open on September 13 in the city of Hwasung, Gyunggi-do.  ‘Vic Market’ is membership warehouse retail store chain similar to COSTCO Korea in terms of product assortment and target consumers.  According to Lotte Mart, over 120,000 customers have signed up for the membership since the launching of Vic Market in June 2011.