WASHINGTON, D.C., U.S. – Vietnam’s wheat imports in 2016-17 are expected to increase due to low wheat prices and strong demand for feed and milling wheat, the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) said in a July report. 

Imports are estimated at 5.5 million tonnes, an increase of about 500,000 tonnes compared to the FAS’s previous estimate and about 2.5 million tonnes compared to the 2014-15 imported volume. Of 5.5 million tonnes imported in 2016-17, milling wheat is about 2.4 million tonnes and the outstanding amount of 3.1 million tonnes is for feed wheat.

Total wheat consumption for 2016-17 is estimated at 2.9 million tonnes, up 225,000 tonnes from the previous year due to the increased demand for feed and wheat-based food products.

For 2015-16, consumption was revised up 200,000 tonnes due to the increased use of feed wheat by the local feed industry. The 2017-18 wheat consumption forecast remains high, about an increase of 150,000 tonnes.

The increase in feed wheat consumption reflects the feed wheat industry’s growth. At the same time, the increased consumption of milling wheat is driven by the on-going demand for wheat-based products in the fast-food industry.

Feed demand in 2016 increased a significant 31% compared to the previous year. The increase was generated in the animal feed sector, specifically in the swine industry as Vietnam exported live swine to neighboring countries.

Farmers in many provinces across the country expanded their swine production rapidly to benefit from a robust border trade. With high demand and tight feed supply from manufacturers, home-made feed production increased rapidly, the FAS said.

However, homemade feed production is expected to decrease sharply in calendar year 2017 and 2018, due to border closures of neighboring countries. The FAS revised the total feed demand in the calendar year 2017 from 27.49 million tonnes to 28.06 million tonnes because there has been a slight reduction in the swine herd.

Feed industry experts acknowledge that local feed mills have a supply of excess ingredients — warehouses are full of corn and feed wheat. In 2017, sales of the latter are expected to be cut in half. The situation, according to feed mills and local feed ingredient importers, is expected to last until the end of 2017.

Total current demand for milling wheat ranges from 1.5 million to 1.6 million tonnes per year with an increase of about 50,000 tonnes per year. The increased use of milling wheat is due to the growing demand for superior wheat, which is used for higher quality bread and cakes introduced by western food outlets, the FAS said.

Vietnam’s wheat mill-designed capacity is around 3.2 million to 3.4 million tonnes per year. Strong competitive foreign-owned mills have cut into the number of local mills — there are only a few small local private mills existing in the country, according to the report.

Corn is the second most widely produced annual crop in terms of acreage in Vietnam. According to the Ministry of Agriculture and Rural Development (MARD), the revised Vietnam corn production is estimated at 5.57 million tonnes in 2016-17, due to larger harvested area. The government’s policy of shifting current rice cultivated areas into corn has not been as effective as intended. Corn harvested area have increased only slightly, the FAS said.

Corn imports for 2016-17 are estimated at 8 million tonnes and 7.5 million tonnes in 2017-18. This is a downward revision due mainly to the scale back in the hog industry and large carry over stock from 2016-17.