April 21, 2012

Following the demand from the food industry, the livestock and aquaculture feed sectors, and the vegetable oil industry, Vietnam's oilseed production continued to fall well below.

Although plans have been set to expand growing areas for major oilseeds crops, Post doubts that production will increase as much as the Government of Vietnam desires due to the high input costs and generally low yields of oilseeds crops, and slow expansion in growing areas.

Imports of soy in 2011 rose significantly due to the increased demand from the food processing, livestock, and aquaculture feed industries, and the vegetable oil industry combined with a 0% import tariff. Vietnam's soy imports reached a record in 2011, surpassing one million tonnes. This represents a 350% increase over the previous year; 22% of the total imported volume was sourced from the US.

Post expects imports of full-fat soy to steadily increase in the next three to five years. Soy meal imports increased to a record three million tonnes to meet the growing demand from the livestock, and aquaculture feed sectors. US soy meal imports fell to 66,000 tonnes, a decrease of 85% from the previous year.

This decline is due in part to the opening of the first oilseed crushing facilities in Vietnam during 2011. Accordingly, Post projects Vietnam's SBM imports to decline slightly in 2012 and 2013 as the local production will fill the growth of feed industries.

Vietnam's shift to importing more beans for local crushing is a positive development for US trade.

The US has a larger market share and competitive advantage in exports of soy compared to soy meal within the Vietnamese market.

In 2011, for the first time Vietnam produced soyoil from commercial crushing facilities, but continued to import an estimated 734,000 tonnes of crude and refined vegetable oils of all types in 2011, a 1.7% increase over 2010, to meet growing demand.

Post expects total imports of vegetable oils to ultimately remain constant in 2012, as the increase in local production will help meet growth in local consumption and export demands.