Vietnam pig producers face squeeze on pig price cap, ASF return

Posted by Marina

Pig producers in Vietnam are facing a squeeze on their margins that could hit efforts to repopulate the country’s pig herd and further dent feed demand in the country, market sources have told Agricensus.

Producers are caught between government efforts to cap the price of pigs at a time of poor domestic demand, rising pig prices in China and amid fears that a fresh round of African swine fever infections could lead to another round of culls.

Pig prices have eased in recent weeks after China-backed demand took prices in some parts of the country to over VND100,000/kg ($4,310/mt), with national prices now averaging around VND76,000/kg ($3,270/mt).

That in part is down to falling domestic demand, as the country responds to the Covid-19 outbreak.

Government initiatives that have sought to clamp down on runaway pork prices and cap the price at VND80,000/kg ($3,440/mt).

“We all know price is based upon supply and demand. Pig prices have really dropped recently because the potential for consumption is down since schools are closing and not many people are willing to dine out due to Covid-19,” one Vietnam-based trader said.

“But I think the price will be higher soon because I’ve heard that African swine fever is coming back. The virus has not been controlled,” the trader said.

“The production margin isn’t good – it will limit repopulating, especially with ASF and Covid-19 here,” a second market source said.

Vietnam’s pig producers have been locked in a vicious circle of spiking pig prices, as ASF raged through the country’s herd, incentivising repopulation efforts only for many pig farmers to then suffer a reoccurrence of the disease among the new herds.

That’s raised doubts over the likely strength of demand from the country’s feed makers, with Vietnam one of the world’s biggest importers of corn along with a sizeable importer of soybeans, soymeal and corn-based DDGS.

China cross-border trade

Since the identification of ASF, exactly a year ago, the country’s tight logistical ties to China has meant it has also had to battle the coronavirus Covid-19 in recent weeks, while trade sources have also flagged fears of avian flu hitting the poultry sector.

That has further clouded the likely demand scenario for the months ahead, with corn, soymeal and DDGS demand all expected to suffer, while pig prices in China – which can incentivise cross-border trade with Vietnam – have continued to rise.

“All markets are very slow and we have to adapt,” the trader said.

Source: Agricensus