Heavy soymeal stocks blunt Vietnam's 2020 import outlook

24 Dec 2019 | Tim Worledge

Heavy soymeal stocks will dampen import appetite into Vietnam through early 2020 as the country’s pig sector continues to face a slow recovery after the outbreak of African swine fever (ASF).

Even with domestic pig prices setting new records this week, the path to recovery remains long as farmers’ attempts to cash in on the increasing price through repopulating herds have so far ended with fresh outbreaks of ASF.

That has left trade sources estimating that the country is approaching the end of the year with over half a million mt of meal in stock – around 10% of the country’s estimated annual demand and nearly 50% higher than forecast.

“There are some expectations from local news that soybean meal stocks in the rest of 2019 are estimated at 530,000 mt,” one market source told Agricensus.

The USDA is expecting 2018/19 marketing year ending stocks of 354,000 mt, falling to 309,000 mt by the end of 2019/20, and increased its forecast for Vietnam's meal imports to 5.45 million mt at the December update to the Wasde report.

“I think we won’t see much soymeal imports through the beginning of 2020,” a second source agreed, as even with high pig prices it will take time for the herd to be rebuilt.

Pig prices in the north of the country were reported at the VND100,000/kg level on Monday ($4,320/mt), setting a new domestic record and firing further attempts to repopulate from the country’s biggest players.

However, much of Vietnam’s pig herds are raised on small to medium-sized farms, many of which have invested in repopulation before only to lose money when a fresh outbreak of ASF strikes.

“The price is attractive to repopulate pigs, but it should be gradual in 2020, because the supply of pigs and sows all need time, and the hope that ASF doesn’t come back,” the first source said, pointing out that imports of corn, soymeal and DDGS were relatively stable in 2019 versus 2018 levels.

“Meanwhile, everyone is talking the pig herd down by 30-50%. So, the question is on stocks, and whether poultry, beef and aquafeed has covered the balance,” the first source said.

Corn demand has been increasingly driven by a growing poultry market, meaning that the country is on track to chow through any overhanging supply, but soymeal demand has been slower.

“Soymeal is more closely correlated to aqua and swine, but now those are in difficulties. I think soymeal imports will be less,” a third source said.