Vietnam faces corn, soymeal stock crunch on supply disruption

7 Feb 2020 | Tim Worledge

Traders serving Vietnam’s feed sector have sounded a warning about stock levels for feed components, as logistics concerns spark fears about supply, with corn potentially exposed as stable poultry demand continues to deplete reserves, market sources told Agricensus Friday.

Stock levels for corn, soymeal, corn-based DDGS and other additives, such as  whey, are running low with a suspension of cross-border trade from China and a potential lack of container supply limiting restocking options.

The situation is an about-face from the position at the end of 2019 and start of 2020, when stock levels were thought to be comfortable and the sector sat out opportunities to book fresh volumes on relatively high cash market prices.

“I think two or three months ago, when CNF prices were up a lot but local demand was slow… not many deals were made,” one Vietnam-based source said.

“And now, after the Tet holiday with African swine fever gradually controlled, feedmills are increasing their volume, so the stocks are a little short,” the source said.

Vietnam has seen feed demand from its pig sector – which is heavily reliant on soymeal – take a severe hit through 2019 as ASF spread from China.

But broader feed demand has remained relatively well supported, particularly for corn, amid a vibrant appetite for poultry and aquaculture.

“It seems there’s a tight supply for meal, but it’s not impacting feedmills too much because consumption for swine feed is also coming down,” a second Vietnam-based source said.

“For meal, it shouldn’t be too much of a problem, but for corn it could be because poultry feed demand is good. DDGS I think is also a concern,” the second source said, with a lack of supply of containers posing real problems in securing fresh supply.

Local traders are said to have booked some volumes of Russian corn that should alleviate some of the immediate supply fears, but the decision to pass over opportunities to restock amid high prices and fears over the strength of first quarter 2020 is now proving awkward.

“Feed mills are covering through containers from US for soymeal and corn containers from Myanmar… they are trying to cover the shortage for corn, soymeal now, but the container issue is an unexpected matter in the market,” a third Vietnam-based source said.

Earlier in the week, trade sources highlighted that a slowdown in China-based trade was cutting the supply of empty containers to US export hubs, restricting their capacity to move US agricultural products like DDGS or soymeal.

Vietnam has become one of the world’s biggest importers of corn in recent years, as its livestock business has undergone huge growth on the back of domestic and China-derived drawn.

The USDA expects Vietnam to import 11.5 million mt of corn in 2019/20, with 5.45 million mt of soymeal, while the US Grains Council puts DDGS imports in the calendar year 2019 at just over 1.2 million mt.