This is part of a general picture in the world shrimp situation 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.
“Traditionally, the US retailers will step in for their big holiday buys in June in an attempt to capitalize on low prices from the peak harvest,” said Todd Rushing, co-founder of US-based Shrimp Trader, an online shrimp sales platform.
Buyers were often faced with the dilemma of deciding when to jump in. Jump in too early and you may be paying too much in a falling market; jump in too late and you may risk missing the buy opportunity, said Rushing. Often prices would move up after the larger buyers made their commitments.
“However, this year we are seeing some hesitancy from large buyers to make the ‘big buy’”, he told Undercurrent. As a result, prices are not rising.
Reports on production in Asia indicate the “shrimp pipeline will be flowing nicely. Buyers may be changing their habits to buy as they need”, said Rushing.
Last year, price started to rise in Asia around June, as buyers came in.
The price for 70 per kilogram count Indian vannamei hit the bottom level in 2014 in week 24, at INR 255/kg. Prices then increased to INR 340/kg and in week 36, the highest level of the year, before starting to slide. The latest data from India shows prices at INR 220/kg for week 22 of 2015.
Indian vannamei raw material prices for size 70 count shrimp. Source: Undercurrent News prices portal
Thai raw material prices also increased after June last year, when they where THB 192/kg, for 70/kg count size. Prices increased and hit THB 218/kg in August, falling to THB 179/kg in December. They then bounced up to THB 209/kg in February, as Thai processors anticipated more orders before the Boston seafood show, then dropped when this didn’t happen.
Prices for 70/kg count raw material from Thailand are now at around THB 156/kg.
Thailand vannamei raw material prices for size 70 count shrimp. Source: Undercurrent News prices portal
Reports from Ecuador also seem to suggest prices are unlikely to increase, as demand is lower from China. The early mortality syndrome (EMS) outbreaks in Central America are not seen as in big enough production countries to hit prices like EMS in Thailand, Vietnam, China and Mexico did, however.
“I don’t see prices moving up like that this year. I see prices moving down further through end June. When major US buying starts, prices will move up to some degree, but maybe 5-10% maximum,” said Jim Gulkin, managing director of Siam Canadian Group, a Bangkok, Thailand-based frozen seafood supplier.
“Short of any unforeseen raw mat issues, there are no signs pointing to a strengthening in price. Supply is good and demand may spread over a larger window this year,” said Rushing.
Source A, an executive with a large Indian shrimp supplier, agreed with both Gulkin and Rushing.
“Buyers are waiting. They are very cautious on new purchases due to the continuous decline on the prices. Many buyers indicate that they need to cover their requirements but would like to wait as prices are still coming down,” he told Undercurrent. “I think prices will still come down a bit. Packers are resisting the lower offer prices. Production looks good and is expected to continue for a few more weeks.”
In a market summary sent to Undercurrent, Gulkin gave his view of production in 2015.
“Thailand raw material supplies are continuing to improve. Although production is still massively down from 2010, things are getting better, step-by-step.”
There were differing viewpoints on the extent of the recovery of Thai production in 2015, which was around 200,000t in 2014, during the recent Thaifex-World of Food Asia trade show, in Bangkok.
Rittirong Boonmechote, the president of Thai Union Frozen Products’ global shrimp division, is forecasting 250,000t-270,000t for 2015. Others, such as an executive with Charoen Pokphand Foods interviewed by Undercurrent, sees production for 2015 being in line with 2014, or even lower.
As for Indonesian production, Gulkin forecasts this will be higher than last year. However, “currently, Indonesian processors are struggling to get orders due to the lack of orders from the US and very competitive pricing from India", he wrote.
“Indian production will also be higher than 2014. Production will continue to increase through the month of June, and some downward price adjustment is expected towards the end of the month,” he wrote.
Others disagree Indian production will be up, however.
“Everyone is waiting to see what the Indians are going to do,” said Marc Nussbaum, president of US importer International Marketing Specialists.
In 2014, India upped production to around 380,000t vannamei and black tiger, up considerably on 2013. This is partly because of a move toward vannemei, which has gone from next to nothing to around 70-75% of Indian production in a few years.
According to the shrimp buyer with one large US foodservice outlet, source B, who did not wish to be quoted by name, it is not looking like Indian shrimp production will grow in 2015.
“Supply is not healthy this year, especially for medium and larger sizes. Production estimates suggest volume will be the same as 2014, the first time vannamei production in India is not growing,” he told Undercurrent.
Partly due to this, source B is a little more cautious on supply than the others.
He feels the risk of prices turning around outweigh the chances of them going down.
“That is the key unknown. By the time people realize, it would be too late,” he said.
Source B sees Vietnam production as being “stable, at best”, citing the amount of shrimp being imported from India and Ecuador for reprocessing.
Although Gulkin feels Vietnamese production will increase, he also mentioned the level of imports.
“Vietnam production is expected to be higher than last year, although Vietnam continues to import large quantities from India for further processing. Vietnam processors are holding their prices firm, expecting the market to move up when main holiday season purchases get underway from US and later Europe, but that might be wishful thinking,” wrote Gulkin.
“Chinese production is still an unknown at this point. We hear about ongoing disease issues but really won’t have a clear picture of the situation until end June, when main harvesting begins,” he finished.
What was 2014 production?
Assessing global shrimp production is always tricky, because of countries such as Vietnam and China and, to a lesser extent Thailand, importing raw material from other countries for re-processing.
According to Undercurrent source estimates, Thailand was between 180,000t-200,000t; with India at 380,000t vannamei and black tiger, with 70-75% now vannamei.
China is said to have produced 800,000t. In Vietnam, officials and large processors claiming as much as 660,000t was produced.
As Vietnam is importing from India and Ecuador, sources are skeptical about this level. Between 400,000t and 500,000t would be more realistic, possibly even less, one source said.
The same is true of Indonesia, where the government claims 442,379t for vannamei and 131,810t for black tiger for 2014.
“I seriously doubt that. Unfortunately there are no other reliable sources for this information. If I was to guess, a wild guess at that, total production with vannamei and black tiger combined would be 300,000t-400,000t,” the source said.
For Ecuador, the largest producer in the Latin American region, production was between 300,000t and 320,000t in 2014.
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