We expect the Vietnamese pork price to rebound in 2H22, led by Vietnam’s economic recovery package and its revived tourism amid the loosening of COVID-19 restrictions and the country’s full reopening. Hence, the Vietnamese pork margin will fatten in 2H22 (against some Vietnamese pork margin in 1H22). Of listed stocks which have pork operations in Vietnam, we reiterate our TRADING BUYs on CPF and TFG, led by fatter livestock margins in 2H22.
Vietnam’s hog and pork production to rise modestly in 2022
Based on Vietnam’s Ministry of Agriculture and Rural Development (MARD) data, Vietnam’s sow herd will rise by 3% (from 3.1m in 2021 to 3.2m head in 2022). We assume that its swine herd will rise by the same magnitude of 3% (from 28.1m in 2021 to 29m head in 2022). However, Vietnam’s swine herd decreased 1.13% YoY in 1Q22 due to the impact of COVID-19 situation and higher feed costs leading farmers, especially small-scale backyard ones, not to re-herd. Based on USDA’s Livestock and Poultry: World Markets and Trade report on Apr 8, Vietnam’s pork output will be 2.72m tonnes in 2022, up 5% YoY, led by higher repopulation pace in medium-to-large pork producers and slower pace for small farmers due to the African Swine Fever (ASF) threats.