ERS Analysis: Southeast Asia- Growing Meat Demand, Feedstuffs Imports

Earlier this month, the USDA’s Economic Research Service (ERS) published an article (“Southeast Asia’s Growing Meat Demand and Its Implications for Feedstuffs Imports,” by Tani Lee and James Hansen) which explained that, “Southeast Asia’s rising incomes, growing population, and increasing urbanization have contributed to growth in livestock production and meat consumption, particularly poultry and pork.”

Background

Within the region, the article focused on: Indonesia, Malaysia, the Philippines, Thailand, and Vietnam, and noted that,

According to USDA’s International Long-Term Projections to 2028, the region will become the world’s fastest-growing importer of soybean meal—a key ingredient in animal feed—over the next decade and will overtake the European Union (EU) as the largest soybean meal importer by 2022.

The authors also pointed out that, “There are growing concerns about recent confirmed cases of African Swine Fever (ASF) expanding into Southeast Asia, which will likely curb expansion and potentially limit imports for feedstuffs. However, ASF was not an issue in the region during the development of the most recent commodity projections in October 2018.”

Lee and Hansen stated that, “Every Southeast Asian country has different meat preferences, as reflected by their levels of consumption and production;” however, “All the region’s nations are projected to increase their consumption and production of pork and poultry over the next decade.”

The ERS article pointed out that, “Southeast Asia’s poultry production expanded by 56 percent in the last decade, growing from 5.9 million metric tons (mmt) to 9.2 mmt in 2018, and is expected to reach 12.3 mmt by 2028. The growth in the region’s pork production was slower; it increased 23 percent from 2009 to 2018 and is expected to rise 21 percent by 2028. The pace could be attributed to the region’s overall preference for poultry over pork, as most Southeast Asian countries produce much more poultry.”

Soybean Variables

With this background in mind, the discussion turned to a more detailed look at soybean market variables, and stated that, “Southeast Asia’s soybean meal imports make up a much larger share of its imports than do whole soybeans because of the limited number and capacity of soybean crushing facilities in this region.

“Imports of soybean meal feed more than tripled from 2000 to 2018.

The region is projected to account for 43 percent of the projected increase in world soybean meal trade by 2028.

Soybean meal imports are projected to surpass EU imports in 2022, growing to 22.9 mmt by 2028. Argentina, the dominant global soybean meal supplier, is the largest supplier of soybean meal to Southeast Asia, followed by Brazil, the United States, and India.

By 2028, Southeast Asia accounts for almost one-third of the global soybean meal import market share.

“Despite the region’s constrained crushing capacity, whole soybean imports grew to 9.4 million tons in 2018 and are projected to increase to 11.9 million tons by 2028.”

Corn Variables

In a closer look at corn market variables, the ERS article stated that, “Southeast Asia’s corn imports are projected to grow by 8.7 mmt between 2018/19 and 2028/29 to reach 22.9 by 2028/29. Most of the growth is driven by Vietnam and Malaysia, the fastest growing corn importing countries in the region.

“Argentina and Brazil are the leading suppliers of corn to the region, while the United States, Russia, and Thailand are residual suppliers.”

Wheat and DDGS

In addition to corn and soybeans, the ERS article noted that, “After corn and wheat prices peaked in 2008/09, wheat and DDGS imports began to expand in Southeast Asia.”

“Wheat imports, food and feed, are projected to continue to expand and reach 23.4 million tons, with about a quarter for feed at 9.1 million tons by 2028.”

Lee and Hansen added that, “Distillers’ dried grains with solubles (DDGS), a coproduct of ethanol production from corn, can be used as an energy and protein source in feed. The region’s imports of DDGS rise as countries implement policies that restrict corn or feed-grade wheat imports, as was the case in Indonesia and Thailand. DDGS is a feed substitute for both grains and soybean meal. The United States is the region’s leading supplier of DDGS. Thailand and Indonesia are the fourth- and fifth-largest markets for U.S. DDGS, while the rest of Southeast Asia imports very small amounts.”