September 10, 2019


Demand for feed from Vietnam's pork sector falls due to ASF



Demand for corn from Vietnam's pork sector has dropped this year due to the African swine fever outbreak in the country, but an increase in poultry consumption helped to soften the impact on the local feed industry, S&P Global Platts reported.


As the biggest importer of corn in Southeast Asia, Vietnam brought in 10.12 million tonnes of corn last year, as the crop is a key ingredient for hog feed.

The severity of an ASF outbreak affects the Vietnamese feed industry's use of corn which could fall by 10% year-on-year in 2019, said Rabobank's senior grains and oilseeds analyst Oscar Tjakra.

"African swine fever has had a significant impact on the industry, particularly in production and trade in pork and livestock feed ingredients such as corn in Vietnam. Mainly, swine feed volume has decreased between 20%-30% due to the reduction of pig population because of the ASF outbreak," said Mariano Berdegue, managing director of Cargill Feed & Nutrition in Thailand and Vietnam.

Demand for feed from the hog industry has dropped about 20%-25%, a Vietnam-based consultant working with a major grain exporters' body said.

In 2019, corn imports in Vietnam were at 5.73 million tonnes as of August 15 compared to 5.76 million tonnes during the same period in 2018, according to the country's custom data. In the last five years, except for 2017, corn import growth in Vietnam has ranged between 10.8%-117.9%.

In 2017, corn demand took a hit following a scale back in the hog industry and also partly due to the price competitiveness of feed wheat.

"Any reduction in Vietnam's corn import demand will reduce Southeast Asian corn import demand. I think Vietnam's corn import will decrease in H2 2019 as compared to H2 2018 due to ASF," Rabobank's Tjakra said.

The ASF outbreak has also caused a diversion of consumption to other meat - especially poultry - apart from pork. As such, the poultry sector helped cushion the impact that the feed sector suffered from due to falling feed consumption.

The demand for poultry has increased significantly, thus driving demand for feed for broilers, layers, ducks and native chickens. These developments partially offset lower demand for pork, Cargill's Berdegue said.

"There has been a shift in consumer behavior as many turn to non-pork meat products, such as beef and poultry ... poultry diets require more corn, and this ... should minimise impact to corn imports going forward," Berdegue added.

Rabobank's Tjakra also echoed a similar view saying, "decrease in corn demand from the hog sector, however, will be cushioned by increase in animal feed production from poultry [broiler and layer] sector to certain extent."

Berdegue said that it is difficult to predict when overall feed demand for swine will return to the levels seen in the fourth quarter of 2018.

- S&P Platts