INTERVIEW: African swine fever hurts Vietnam's feed use, COVID-19 impacts meat demand - Cargill

New Delhi — The outbreak of the African swine fever in Vietnam last year led to the culling of millions of pigs and destroyed feed demand, and while many feed suppliers in South America, especially Argentina, hope for a recovery, Cargill's Vietnam country president Luan Nguyen said he does not expect "a significant uplift in animal population" in 2020.

Adding to the African swine fever is the huge uncertainty created by the coronavirus pandemic.

"The COVID-19 pandemic has started to impact feed production as well as the protein/meat demand. Depending on the outbreak situation, the estimated numbers will be adjusted accordingly," Nguyen told S&P Global Platts via email.

Vietnam is one of the largest buyers of feed ingredients in Asia, which are used for rearing livestock, poultry and in aquaculture. Corn is the top feed product imported by Vietnam followed by soybean meal and wheat.

In the first three months of 2020, corn imports dropped to 1.32 million mt, from 2.05 million mt a year ago, Vietnam's customs department data showed. The drop was mainly due to the African swine fever.

"From what we have been tracking on the imported volume into Vietnam, the corn number reached a record in 2019 at 11.7 million [mt] (vs 10.15 million [mt] in 2018), while feed wheat number was 1.05 million [mt] (vs 3.15 million [mt] in 2018)," Nguyen said.

The combined feed imports in 2019 are just about 4% lower year on year, which are considered better than the overall reduction in feed production last year because of the African swine fever outbreak, he added.

Vietnam first detected African swine fever in early 2019 and by December, more than 5.9 million pigs -- 23% of the swineherd -- had been culled, according to the US Department of Agriculture's Foreign Agricultural Service.

According to a Rabobank estimate, Vietnam lost nearly 7.5 million pigs, or 27% of the total herd, to African swine fever during February-November 2019.

While efforts are on to raise the hog population with high pork prices making the business attractive to farmers, fear of a recurrence of the ASF looms over the industry.

"Many farmers have been trying to restock, but we don't see a significant uplift in animal population. The reasons are: 1) ASF is still impacting the industry and it reduces the farmers' success rate; 2) due to a limited number of available sow population, we observe a slight increase of sow population, but not yet a significant increase in grower/finisher population," Nguyen said.

Nguyen said the hog population will increase slightly toward the second half of 2020, but overall, it will still be smaller than 2019 and 2018.

According to the latest USDA's FAS estimates, the pig population in Vietnam is seen at 24 million-25 million in 2020, compared with 24.9 million in 2019 and 28.2 million in 2018.

According to the USDA FAS' latest report, Vietnam's corn imports were lowered to 11.1 million mt in 2019-2020 (October-September) compared with 11.5 million mt projected in March.

Similarly, Vietnam's corn consumption is seen falling to 14.85 million mt in 2019-2020 as against 15.4 million mt estimated in March.

Besides demand concerns, supply issues have also cropped up with the COVID-19 pandemic. Most of Vietnam's corn imports usually come from Argentina and Brazil. Various measures taken by these countries to control the spread of the coronavirus have impacted supply from these countries, forcing some Vietnam buyers to explore alternative markets such as the US and Black Sea origins.

"The traditional countries of origin for corn exports into Vietnam are still Brazil and Argentina. However, given the fluid situation because of COVID-19 outbreak, which could have impact on the shipment, it is possible that buyers look for some stopgap cargo for their production and new sources of supply could be a hedge to ensure their production/business continuity," Nguyen said.