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What scenario for feed market in 2009?
Vietnam’s feed market has become alarmingly hot in the last few months. The Vietnam Feed Association has warned that the feed price could increase by another 20 percent, and if so, Vietnam’s husbandry and seafood industries would suffer.
However, according to the information centre under the Ministry of Agriculture and Rural Development (MARD), it is not very likely that the feed market will see big fluctuations by the end of the year.
By May 15, 2009, the total cultivation area of soybeans and maize, which serve as input materials for making animal feed, had seen considerable growth in comparison with the same period of 2008.
The maize cultivation area in the first five months of 2009 reached 715,000 hectares, an increase of 0.7 percent over the same period of last year. The soybean cultivation area also increased by 17.5 percent with the total area of 129,800 hectares.
According to the Cultivation Department under MARD, Vietnam reaped 18 million tonnes of rice in the winter-spring crop, an increase of 0.3 percent over the same period of last year. This means that the volume of husks to be provided as material for making feed in the second half of the year will be 2.4-2.52 million tonnes.
The total import turnover of feed in the first five months of the year reached $832 million, a decrease of 27.84 percent over the same period of last year. The biggest import turnover decrease of 37.81 percent took place in the first quarter of 2009.
It is clear that the economic downturn which broke out in late 2008 has influenced feed imports. In January 2009, the month that witnessed the biggest volume of imports, only $90 million worth of products were imported, just 45 percent of January 2008.
According to the Q2 report by MARD, the recovery in import was seen in April 2009 when the import tax decrease decision took effect. However, imports slowed down again in May due to two reasons.
First of all, the prices of most products in the world which are input materials for making fed have been fluctuating heavily, which has prompted Vietnamese enterprises to stop importing temporarily.
Second, difficulties in purchasing foreign currencies have forced many enterprises to stop importing. If they continue signing new contracts, they will have to either face risks in exchange rate or fall into insolvency.
The import of materials for making feed in the first five months of the year seemed to go the same way as during the same period of 2008, when import turnover unexpectedly dropped in May after increasing continuously the months before.
As such, it is likely that imports will rise again when farmers begin developing their herds of animals again, which will lead to a higher demand for feed.
According to ERS/USDA, the maize price in the US, after reaching its peak at $4.4/bushel in the first months of the year, will decrease to 43.9-4/bushel from now to 2010 and will maintain the same price levels in the next crops, which is still 35-40 percent higher than that of the 2007 and previous crops. Chicago’s maize will hover around $360-390 per tonne, down by 8-10 percent over 2008.
In Vietnam, if enterprises still find it hard to purchase foreign currencies, while they have to import goods as stocks run out, this will lead to high production and the high sale prices of products. In this case, the feed price will not go in accordance with the world’s prices, but will increase sharply.
Vietnam’s animal feed market is relatively big, importing around $1.5 billion worth of feed products every year.
VietNamNet, TBKTVN
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