Seoul, Oct 14 - South Korea's top food processing firm CJ Cheiljedang said on Tuesday it would keep grain imports to a minimum, as a weaker won currency inflates purchase prices.
South Korea, which imports almost all its grain needs except rice, has seen food prices soaring this year as prices of wheat, soybean and corn jumped to record highs on supply worries, although they have turned lower in recent months on prospects of the global financial crisis weakening commodities demand.
But the depreciation of the won currency, already one of the world's worst performers, has nearly offset the impact of falling grain and freight costs, keeping domestic food prices high.
"We plan to put off purchasing grains in large quantities and will keep inventories low until the foreign exchange rates stabilise, as the won has fallen more than 30 percent this year, increasing import costs," its spokesman Min Tae-jung said.
CJ, South Korea's top seller of wheat flour and sugar products, imports around $1 billion worth of grains such as wheat, soybean and annually.
A trader at a major flour wheat importer, however, said it was not planning to reduce grain imports as delaying purchases due to the current exchange rate would provide little help to its future dollar payments, which are usually settled three or six months after a contract is signed.
"But things are quite tough these days as we are paying high interest rates and charges in securing bank credit lines because the dollar is in short supply among domestic banks due to the global financial troubles," said the trader.