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Vietnam continues to snap up Indian corn at steep discounts amid low pork prices

Highlights

Indian corn offered at $25/mt discount to South American

Low interest in US corn in Vietnam on drying concerns

Q3 corn demand partially covered with EU feed wheat

  • Author
  • Melvin Kwok
  • Editor
  • Wendy Wells
  • Commodity
  • Agriculture Shipping

Vietnam's feed buyers are continuing to snap up Indian corn for spot demand in March amid offers at steep discounts of around $25/mt to other worldwide origins and weak domestic pork prices, market sources said March 8.

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Indian corn was heard offered to Vietnam at $310/mt CFR for a 55,000 mt parcel for April-May shipment, well below offers for South American or South African corn cargoes at $336/mt CFR for similar shipment periods, market sources said.

Vietnam had imported 1.17 million mt of corn from worldwide origins as of Feb.15, latest General Department of Customs data showed. Industry sources estimated about 150,000 mt of the total was from India.

This comes after the country purchased an unusually high 872,000 mt of Indian corn in 2022, customs data showed.

Vietnamese buyers said they were not encountering issues with the quality of Indian corn and buying interest will continue as long as the hefty discount to South American corn remains.

"The issue of aflatoxin can be negated by blending [with South American corn] at the feed mill, as long as all the other specifications are acceptable," a feed buyer said, adding that blending with Indian corn was one way to bring down the per unit cost of raw materials for feed milling, especially when pork prices remain low.

Domestic pork prices have faced resistance since the Tet holidays, with live hogs priced below Dong 50,000/kg ($2.11/kg). "There is still lack of demand for pork and the local market is still collapsing," a market participant said.

Speculation about Russian corn being competitive in Vietnam continued to be heard in the market, but participants doubted trades could occur as buyers were unable to facilitate such imports.

US interest weak

US corn continues to be the most competitively priced into Asia for April and May shipments before the Argentinian new crop reaches the market, although the rising US Pacific Northwest corn premium to Chicago Board of Trade futures has pushed demand back to the US Gulf Coast, according to sources.

However, interest in US corn from Vietnam remains low.

"Livestock farmers find that US corn is not yellow enough for poultry feed, and the way the corn is dried in the US makes it difficult to handle in the local weather and humidity," a Vietnamese trader said.

Forward demand for corn and feed wheat remains strong, with Vietnam starting to secure volumes from the Brazil new crop for H2 shipments in February while also picking up feed wheat for July and August shipment with Australia, Romania and Bulgaria optional origins.

Feed wheat offered in the $310s/mt range for Q3 shipment further pressured corn demand in Vietnam, indicated at $314/mt CFR for July shipment and $309/mt for August shipment, sources in Vietnam said.

Platts assessed CFR Northeast Asia corn at $335.25/mt March 7, S&P Global Commodity Insights showed.

Logistics also continue to pose challenges in Vietnam in the short term.

"Bringing in large volumes of Indian corn will put some pressure on the logistics system on top of required storage for South American cargo and also free storage for blending activity," a buyer said.

Another feed buyer in Vietnam said logistics challenges will cap spot demand.

"In the south warehouse spaces are tight while in the north, coastal supply cannot cover demand as there are too many vessels to unload at anchorage," a local trader said.

"There is also about half a million tons of corn stuck in local warehouses that is not sold; it is normally not an issue but currently there is a major slowdown in feed mill demand," the trader added.