Prices have been declining through the first half of 2015, and US demand has been slack as buyers wait for what they think will be the bottom. That point may have just about arrived, said Quang.
“The increase in supply in 2014 led to a large quantity of inventory, that exceeded the demand in the beginning of 2015,” he told Undercurrent News. “This caused prices to go down significantly, and continuously.”
In June, selling prices fell below production costs for many farmers, prompting them to cease operations. “However, we are expecting an increase in demand now, because the current attractive price and the shortage of supply will encourage the buyers to purchase,” said Quang.
“When the purchase power becomes stronger and the supply is still low, the price will go up eventually. From my point of view, the shrimp price will start to increase from mid-July, and will rise stronger in mid-August.”
With US buyers holding off on purchases, it is little wonder that Minh Phu's sales there have been down year-on-year, said the chairman.
“But the good news is that in the first five months of this year, our exporting market share in the US has increased nearly 1% compared to the same period last year,” he added.
“Since June, the order demands of the US and other markets have started to increase. The current demand is almost 1.5 times higher than the normal capacity of all of our plants. We are boosting the production of all processing plants to ensure on-time shipments to our clients.”
Steps to combat antibiotic levels
Minh Phu has had to move fast to implement new measures on its farms, after the US and EU changed their accepted levels of oxytetracycline (OTC) residues in imports, said Quang.
The Food and Drug Administration has recently refused shrimp shipments from India, Malaysia and Vietnam entry to the US.
“Previously, the US and Europe did not control the OTC level, and Vietnamese seafood companies obeyed the Japanese standard of 200 pbb. Suddenly, Europe and the US announced the allowed level of OTC in imported shrimp is 100pbb and under 10 pbb [parts per billion] respectively,” he said.
“Therefore, there were a lot of imported shrimp products from Vietnam were found to have exceeding level of OTC.”
Minh Phu, and other shrimp processing companies, took immediate action by strictly controlling the OTC level at 0 pbb, according to Quang. “Hence, rarely do Minh Phu’s products show the presence of OTC.”
“Both Minh Phu’s farms, and contracted farms in the supply chain, are applying the pro-biotic (microorganisms) farming technique, which is purely free of chemical and antibiotic use, and is strictly supervised by our team during the whole process, from farming to harvesting.”
Minh Phu then tests samples from farms before harvesting to ensure the 0 bpp mark, with only those that pass the test approved to harvest.
Undercurrent reported in mid-June that US shrimp buyers were holding back on making big commitments on shrimp, the general viewpoint being that raw material availability would improve later in the year, from all producers.
This fed into a general picture for world shrimp that is far from ideal for sellers. As well as US buyers sitting back, buying in Europe and Japan is slower because of the strength of the dollar compared to the euro and the yen; and demand in China is reportedly somewhat weaker, which is not good news for Ecuador.
No comments:
Post a Comment