COVID-19 Market Report - Southeast Asia

Border Restrictions

India is currently in lockdown for 21 days from March 23 and all land borders from India to Myanmar, Bangladesh, Nepal, Bhutan, Pakistan have been closed with no flights incoming or outgoing until March 31, with exports and imports exempt from the ban.

Vietnam previously had to close its borders to prevent the spread of the virus. The main border gates for the export of agricultural products have reopened. All border gates to Guangxi in China from the Tan Thanh border gate in the city of Lang Son have been reopened. However, exporters are still facing problems in clearance due to increased prevention measures and health inspections.

Thailand has closed land borders to Laos, Myanmar, Cambodia, Malaysia from March 23 until further notice, not applying to transportation of goods.

Logistics

There are increased border control measures and health inspections at border gates.

In China, except for the Hubei province, most trucking services have been reinstated. Although there is still a lack of capacity, which has increased trucking costs. All Chinese airports except for Wuhan airport are operating as usual. With passenger flights to and from China mostly suspended, freight capacity is reduced by approximately 90%, resulting in price hikes for air freights.

In terms of ocean freight, all Chinese ports except for Wuhan port are operating as usual, but with blank sailings and limited capacity. Australia and Vietnam have announced a 14-day quarantine on any vessels outbound from China, delaying transit through these major hubs in North America, Asia, and Africa. Export shipments may be delayed until April.

In India, transports of essentials and agricultural products will remain operational, and the government is allowing all essential and non-essential goods to be moved domestically via trucks. However, an increasing number of trucks have gotten stranded on highways due to restrictions in transport.

There have also been delays at the Customs Office as staff capacity has been reduced to 5-10%. Very few flights are available and those that are are mostly cargo flights. There has also been an 80% decrease in flight capacity to China.

Prices for exporting from India to Europe and North America are surging, with prices to Europe having increased by USD 200-300 per FEU. Freight prices are expected to double in 7-10 days with the lockdown, due to slower customs and port congestion.

There is still a shortage of containers from China in India. There has also been a 70% reduction in ground-level manpower at ports due to the 3-week lockdown effective from March 25.

Vietnam has recently announced a 14-day quarantine requirement for any vesselreturning from China, delaying shipments through the country. Clearance at ports is very slow, however, the amount of goods trucks stuck at the Chinese border has decreased. Airfreight rates are expected to increase as there is limited space available due to flight cancellations.

In Thailand, due to the land border closures, the number of trucks that can transport fruits and vegetables has been significantly reduced.

In Malaysia, movement within the country has been restricted from March 18 to April 14. Ports of Entry and Customs are still working but can be subject to delays due to limited number of staff. Previously only allowed to transport essential goods, commercial cargo transportation between Malaysia, Singapore, and Thailand was allowed from March 19.

Regulations

Vietnam has temporarily banned rice exports to ensure there is enough supply to meet domestic demand. The country will also increase restrictions on imported sugar to be re-exported in 275 days, with extra taxes on imports. In the Philippines, there are restrictions on exporting key food products such as rice and meat. Malaysia has banned rice to be exported as the country has a domestic shortage of rice. Fruits are still allowed to be exported.

Influences on Exports & Imports

In India, prices of export products have been low due to closures of ports in major export markets such as China, the Middle East, and the EU. Exports may gain more momentum by the end of April and prices of cumin, milk powder, cardamom, poultry are expected to recover by mid-May. Demand for turmeric, on the other hand, has seen an increase.

Overall, exports of spices, tea, coffee, seafood, rice which are exported in bulk to China, the Middle East, and the EU have been greatly affected. Wholesale prices of meat, seafood, tea, cumin, and coriander have decreased by 20-40% due to order cancellations in exports. Cumin prices have decreased from INR 16.1K per 100 kg (USD 213.76) to 14.5K per 100 kg (USD 192.52) as exports to China and the Middle East were disrupted. Prices of tea dropped by 40% from INR 200 per kg (USD 2.65 per kg) to INR 120 per kg (USD 1.59 per kg) due to export disruptions in China, the Americas, Europe, and especially in Iran. Decreases of exports in spices, coffee, rice, and beef to Italy and the EU caused domestic prices to fall by 40-70%.

Major export destinations of rice, wheat, pulses, sweets, and spices are the US, Europe, Australia, New Zealand, Israel, Palestine, and Egypt. However, there are challenges in exporting due to increased freight costs and shortages of containers as well as difficulties in passing borders. Indian Basmati rice exporters are seeing a rapid increase of 30% in shipping costs. Exports dropped by 20% in January, and 14% in February compared to 2019 due to reductions in exports to Africa and the Middle East, especially Iran.

However, Indian turmeric demand in Europe, especially the UK, Germany, as well as West Asia has increased significantly as customers look for products that boost immunity. Export demand had been decreasing in February but had a sudden increase in March by 300%. However, exporters say flight cancellations have made it difficult to fully utilize this opportunity.

In Vietnam, prices are currently fluctuating due to uncertainties about the market. Export prices of agricultural products decreased by 30% due to difficulties in exporting to Europe, the Middle East, and the US. Orders from the US and Europe were canceled by 30-35%. The seafood industry has been the most affected and domestic prices dropped sharply as China is the main export destination for products. Catfish prices dropped to USD 0.77 per kg at the end of March, a USD 1.26 drop from last year.

Fruits are also heavily affected by border closures, especially watermelon and dragon fruit, causing a sharp decrease in prices. Dragon fruit prices dropped by over USD 1.28 per kg, with watermelon and bell pepper prices seeing a decrease of nearly USD 0.85 per kg. The market is recovering though, as the situation in China is improving and some fruit prices have seen a price increase.

Vietnamese coconut prices are rising as domestic and global demand is rising. Export prices of coffee also increased to USD 1.34 per kg as Brazilian exports decreased. In addition, with the increase of bean consumption in the US, this acts as an opportunity for Vietnamese legume exporters to increase their exports.

Vietnam is planning to import 190K metric tons ofrice as a contingency plan for the pandemic on top of halting exports. The country has also been importing large amounts of pork from the US, Canada, Brazil due to limited imports from China.

In Thailand, there is a 30-40% decrease in demand for mangoes in main importing regions such as South Korea, China, Japan, Russia, and the Middle East.

In Malaysia, local suppliers are importing rice from Thailand and Pakistan to meet demand.

Taiwan’s Council of Agriculture (COA) is predicting a decrease in exports to China, primarily fruits and seafood products. The COA is exploring opportunities to increase exports to additional markets, assisting with the storing, processing, and or delaying harvest. Agricultural imports from China are expected to decrease, which will impact the inflow of herbal medicines and seafood.

Domestic Supply & Demand

There is a worldwide increase in demand for rice as customers stockpile products amid the coronavirus outbreak.

Prices in India have been undergoing significant fluctuations. Domestic demand has reduced for meats and poultry, and increased for wheat flour, rice, spices, and edible oils due to stockpiling, rising by 15-40%.

The poultry industry has suffered the most as wholesale prices of chicken meat have recently dropped by 50%, as a rumor that the virus spreads through poultry and eggs spread on social media. Egg prices in Mumbai have dropped by 13% compared to February.

Demand for perishable vegetables, grapes, and sugar have also fallen by 15-20% as food service industries such as restaurants have closed. Demand for vegetables with longer shelf life, however, such as onions, potatoes and tomatoes have risen. There is a more than 100% increase in demand for rice, wheat, and pulses. Sweets and spices have seen a 15-20% increase this month.

There is no shortage of grains, pulses, fruits or vegetables in the markets. India is expecting a bumper harvest this season. Numerous workers in production sites, however, have suspended working, which is expected to result in mass stoppages of production.

The Ben Tre province in Vietnam, the top coconut producing province in Vietnam, is currently facing a supply shortage of coconuts as both global and domestic demand is increasing due to its health benefits. Demand for ginger and turmeric has also increased due to its perceived health benefits. Instant food and canned goods purchases have also risen. The tourism industry has been directly affected, which will affect the foodservice industry.

Vietnam expects there to be a surplus food supply that not only exceeds domestic demand but also to meet overseas demand even after the pandemic slows down, especially with an increase in agricultural and seafood products that have not been able to be exported to China.

The Ministry of Agriculture and Food Industry of Malaysia ensures that the food supply is stable. Currently, rice stock inventory is at 400K to 500K metric tons, with the national monthly requirement at 200K metric tons.

In China, agricultural production is resuming in Danyang, central China’s Hubei province and shipments are starting to be reinstated. Prices of groceries have significantly increased by 22% since last year, and the price of pork by 135% compared to last February.

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