Vietnam’s increased meat consumption has made the South East Asian nation a "feed importing powerhouse", according to the US Department of Agriculture.
And with much of the imports coming from markets as far afield as Brazil, India and the US, the dry bulk sector has become a key beneficiary of this trend, according to shipbroker Simpson Spence Young (SSY).
Vietnam’s meat production is forecast to reach a record 4m tonnes this year, which has acted as a key driver in demand for animal feed.
Over the past five years, Vietnam has seen corn imports overtake domestic supply as local farmers have been unable to compete with imported corn both on price and quality.
"Vietnamese customs data reveal that imports of corn are dominated by long-haul trades from Argentina and Brazil, with marginal volumes imported from India and Thailand," SSY said.
According to the International Grains Council’s five-year projections released in January, Vietnamese imports of corn were expected to "advance strongly" to 14.2m tonnes by the 2025/2026 market year.
"The longer-term export outlook for one of Vietnam’s largest suppliers, Brazil, is positive despite recent annual declines, with shipments expected to rise by 8.9m tonnes from the 2020/21 market year to 44m tonnes by 2025/26," SSY said.
"The respective increases in supply and demand, combined with the possibility of an increase in imports from Argentina, would potentially be a positive for bulker tonne-mile demand over the next five years.
"Meanwhile, a growing interest in US corn currently a residual supplier to Vietnam provides a further example of potential increases in tonne-mile demand," SSY said.
Less competitively priced US corn has gained increased attention from Vietnamese importers over the January to August period this year, with US shipments of corn more than doubling on the 2020 total, reaching 500,000 tonnes.
SSY said an announcement from the Vietnamese government of a tariff reduction on US corn and wheat in August could help stimulate US grain imports.
Meanwhile, Vietnamese customs data reveals that shipments from India reached 1.1m tonnes in the first eight months of 2021, compared with less than 100,000 tonnes in the whole of 2020.
While corn makes up the majority of Vietnam’s grain feed, SSY said wheat is considered an interchangeable energy source in some feed formulations.
"In an attempt to replace lagging corn imports, Vietnam has ramped up inbound shipments of wheat, to the benefit of supramax and panamax demand in the Pacific," SSY said.
"The country imported 3.7m tonnes of wheat in the first nine months of the year, up 1.7m tonnes annually."
SSY said Australia’s re-emergence as a leading wheat exporter to South East Asia has involved a revival of its trade with Vietnam.
"Vietnam was one of Australia’s main destinations for wheat exports in August, with the country re-emerging as the largest supplier of wheat for Vietnam, accounting for nearly 80% of confirmed shipments in the year to date," the shipbroker said.
"In contrast, Australian wheat comprised slightly less than 30% of the country’s imports last year.
"Given the underlying growth trend for Vietnam’s grain consumption and another strong year for Australia wheat exports forecast ahead, this has positive implications for this trade in 2022," SSY said.
