Vietnam mulls India corn as Americas woes pressure supply options

Vietnam’s animal feed sector is facing supply restrictions on numerous fronts as fears over supply of corn, soybeans, soymeal and dried distillers grains (DDGS) encourage traders to seek out alternative supply points – with some sources saying India could be tapped for corn supply.

The moves come as fears over the capacity of South America’s ports to provide supply to the Southeast Asian country grow amid national responses to the Covid-19 pandemic, and US ethanol industry faces meltdown on falling driving demand.

“(Feed buyers) feel the logistics problems and now are looking short. We are looking at India supply now. So far, buyers do not accept it… but if a delay from South America happens, they will buy from India,” one Vietnam-based market source said.

Concerns over strike action and delays at South American ports have driven delivered CFR corn offers out of the market, with the usually vibrant cash market reduced to one or two offers a day.

“I’m guessing what’s causing the problems in South American ports are still not sorted out yet,” a second Vietnam-based source said, with the uncertainty raising fears on several fronts and potentially leading importers to turn to India or potentially US supply.

Market sources paint a mixed picture for corn, but acknowledge the country could face tighter supply and domestic prices have reflected that, with one feed miller estimating the price of domestic corn had risen by VND200/kg ($8.50/mt) since the end of last week.

“Almost no sellers are keen to offer in recent days with a fluctuating situation and potential risks of delayed shipments from Argentina,” a third source said.  

At the last available line up data, released on March 13, Argentina’s ports were expecting to load nearly 2.5 million mt of corn in the weeks ahead, with 548,000 mt destined for Vietnam.

“The supply is OK for corn and soymeal here. For soybeans and DDGS it is tough because the US is still having a tough time,” the second source said.

DDGS are a by-product of ethanol production with the US the biggest, most efficient producer of the biofuel in the world.

However, as more Americans are staying at home as part of a lockdown designed to slow the spread of Covid-19, the supply of the byproduct is expected to tighten sharply as ethanol producers face straitened margins and a poor demand outlook.

The US Grains Council puts Vietnam’s 2019 US DDGS imports at 1.2 million mt, making it the third-biggest customer for the US industry and putting it just 50,000 mt behind South Korea, with Mexico the biggest customer on 2 million mt.

“Overall, the market is getting bullish and it’s load port issues that are pushing up local prices, not local demand suddenly recovering,” the third source said.