US goods tax lifting brings a fresh origin alternative for Vietnam
Recent news on Vietnam’s potential lifting of import taxes for US agricultural goods including wheat and corn has prompted...
Recent news on Vietnam’s potential lifting of import taxes for US agricultural goods including wheat and corn has prompted debate about the potential benefits for Vietnam-based flour millers and feed producers.
Market sources expect US wheat and corn imports into Vietnam to increase, but as prices remain uncompetitive compared to Vietnam’s go-to origins, imports are unlikely to make big gains.
“In the long run, if US price is more competitive, it would definitely help with tariff reduction from 3% to 0%,” a Vietnam-based trader told Agricensus, “In reality, the US, European and South American [wheat] tariff is currently at 3% vs Australian and Russian at 0%,” he added.
Australia remains Vietnam’s main wheat supplier, covering 60-70% of its needs, exporting around 2 million mt of wheat annually.
According to the Vietnamese customs data, 530,051 mt of various quality wheat was shipped from the US to Vietnam throughout 2020, and the country has only exported 154,537 mt of wheat to date, since the start of 2021.
Agricensus data shows an APM-1 assessment for Australian APW at $315/mt FOB, alongside Australian ASW at $314, while the US hard red winter wheat was assessed at $321/mt FOB US Gulf.
According to the freight analytical agency ISM, ocean freight rates for wheat cargoes from Australia were quoted in the range of $40-42/mt, while delivery from the US Gulf would cost $85/mt, making US wheat uncompetitive for delivery into Vietnam.
“European and Black Sea wheat still got thistle risk so I would say the US and South American wheat are the main beneficiaries,” a trader told Agricensus, commenting on US wheat quality benefits despite higher price levels.
Vietnam-based feed makers are looking forward to the corn import tariff being reduced from 5% to 3% to support local industry which is now battling another wave of COVID-19, while local corn prices remain firm.
Nevertheless, US corn exporters will have to compete with South American suppliers, who Vietnamese feed makers give preference in both price and quality.
“Major exports still will be done from South America with price and quality preferable, as well as in the last couple of weeks, Vietnam also had a plan to reduce import duties for South American corn in order to lift up pressures of high value for the whole feed industry,” another Vietnam-based trader said.
According to Agricensus Export Dashboard, Argentina has exported 3.72 million mt of corn since the start of 2021, while it has shipped 7.71 million mt in 2020, followed by 536,716 mt supplied from Brazil in 2021 and 3.56 million exported in 2020.
On the other side, the US has only shipped 518,529 mt of corn in 2021, up from just 223,708 mt exported throughout 2020.
Nevertheless, corn and wheat import tax reduction will bring Vietnam an origin alternative for prospective purchases, in case South America, Australia or Europe will face crop, quality or logistics issues.