Asian shrimp packers well behind on North American holiday orders : November 10, 2016
Tom Seaman : Undercurrentnews
Some Asian shrimp packers are delayed on shipping for North American holiday orders, due to shortages of raw material on certain sizes, sources told Undercurrent News.
Buying for the holiday season from US and Canadian buyers is done, but packers are delayed on filling orders, said an executive with one large US shrimp buyer (source A), who declined to be quoted by name.
“Holiday buying is over but packers are delayed filling orders. I think there have been some shortages relative to commitments in Thailand, Vietnam, and India,” source A told Undercurrent.
Early November is late for shipping to meet holiday orders, but plants will continue shipping throughout the month, since they are behind schedule, he said.
The deadline for shipping to the east coast of North America is “pretty much this week”, Jim Gulkin — managing director of Bangkok, Thailand-based Siam Canadian Group
— told Undercurrent.
To Los Angeles, the deadline could stretch another seven-ten days, “depending on origin”, he said, during the recent China Fisheries & Seafood Expo in Qingdao.
This has been causing some higher pricing at the source, for some sizes. “That said, supplies seem generally strong and healthy and demand is quite flat, which doesn’t give me reason to feel there’s any upside to the market,” he told Undercurrent.
“Buyers [in the US and Canada] waited too long, thinking prices would ease; now there is a scramble,” said another top US shrimp buyer, who asked to be quoted anonymously (source B).
So, farmers “smell blood” and are “holding back”, he said.
One shrimp supply executive in Thailand, who also asked not to be quoted by name (source C), said that almost every shipment from almost every packer is getting delayed for buyers.
There are no exceptions, source C told Undercurrent.
Supply on some sizes is extremely tight, due to a gap between the current crop and new crop.
In addition, there seems to be too much demand on certain sizes, “especially popular sizes for US and Canadian retailers, such as EZ peel 16-20 [per kilogram count] down to 31-40, CPTO [cooked, peeled, tail-on] 21-25 down to 51-60”, he said.
“Supply is not short, but is just tight on certain sizes,” source C said.
Although shrimp output in Thai farms is in recovery mode from early mortality syndrome (EMS), there is a sense packers have overcommitted.
“I am afraid some Thai packers seem to be selling more than they can actually produce,” he told Undercurrent.
Siam Canadian’s Gulkin agreed.
“Thailand is having a big problem,” said Gulkin, who has offices sourcing shrimp and frozen seafood across South East Asia and in India and China.
Earlier in the year, the Thai farmers were focusing on larger sizes.
“So, packers took major orders for large sizes, 16/20 [per kilogram count] EZ peel, 16/20 cooked, 21s, 26s. Thailand was taking huge orders for US and Canada,” he said.
However, prices for small-to-medium sized shrimp have since shot up. So, farmers started to harvest early, to capitalize on this.
“Now, when it is time to harvest the big sizes, there is much less. So, the factories are all struggling to get raw material and competing with each other to get these big sizes,” said Gulkin.
There is a window of around two weeks left to ship for the holiday season, he said.
“Another factor causing delays is limited production capacity,” said source C.
“Since EMS, some of the plants decided to shrink down their production capacity, let workers go, and remove some freezing facilities, in order to reduce their fixed costs, to survive,” said source C. “Since then, none of them have ever really come back to their full capacity.”
Thailand produced around 240,000t in 2015, down from as much as 640,000t at its peak. For 2016, 300,000t is seen as possible.
“If supply in Thailand proves to be more stable and steady then we will probably start to see some packers expanding their production capacity back to the same level where they used to be,” said source C.
“Since everything is uncertain and unsure now, all packers are trying to be conservative and proactive. They do not want history to repeat itself. 2011-2013 was really damaging to our industry,” he said, in reference to the period when production dived as EMS hit hard.
In addition to this capacity issue, the need for large packers to process 100% of their raw material in house, with no use of peeling sheds, is also causing issues, he said.
According to the latest US import data, for September, sales from Thailand increased 11.1% to 6,911 metric tons; with India up 15.4% to 17,592t; Indonesia up slightly over 1% to 9,716t; Vietnam’s exports rose by 5.9% to 6,109t and China up 12.2% to 2,961t.
Ecuador’s exports, on the other hand, fell by over 15% to 5,239t. China, not the US, has become Ecuador’s main market now, as well as the EU. Buyers in the world’s second largest economy, however, are currently putting pressure on Ecuadorian prices for shipment before Chinese New Year, sources told Undercurrent.
Indian shrimp not growing fast
In India, raw material is also short, which has caused some issues with meeting US orders, sources said.
“Orders are getting out of India, but it is slow. Some orders are seriously delayed. We have got our orders out,” Siam Canadian’s Gulkin told Undercurrent. “They have disease issues. There is some impact. But, due to all the orders we got out, they are not that serious,” he said.
Overall, it looks like Indian production for 2016 is slightly less than 2015, said Gulkin.
Durai Balasubramanian, secretary of India’s Pattukottai Shrimp Farmers Association, which has some 4,000 members, said growth in the country has been slow in 2016.
“This year, all output has reduced so much,” he told Undercurrent.
“This has put so much pressure on exporters to look for raw material. Harvests have been very poor in Tamil Nadu with 100 and 70 counts. The problem with this industry is people are going on with shrimp production with statistics provided by various companies depends on feed sales,” he said.
“But, if you look at reality and visit ponds the growth and output they are predicting simply isn’t there.”
Growing to 50 counts, in particular, is getting harder and harder to achieve, he said.
There is a big difference between the level of production in ponds last year and this.
The vannamei output of ponds this year is around 3-3.5t, compared to 7-11t last year, he said. “This difference is putting pressure on the industry.”
In Andhra Pradesh, prices are firming up, said another source.
Due to a shortage, prices in Andhra Pradesh — the southeastern state that is the main production region of India, have been moving up — he said.
Farmers have stocked in the state, but the new harvest will not be at market size for a few months.
This is causing packers in Andhra Pradesh to buy in Odisha and West Bengal, states north toward Bangladesh. In Odisha and West Bengal, it is possible that the second crop could finish earlier, maybe mid-November, due to the demand.
Packers in Andhra Pradesh are reportedly paying higher prices to secure raw material, the source said.
Also, he noted that Vietnamese buyers have been buying head-less shrimp from India, likely for re-processing.
In Vietnam, “the production of vannamei seems to have recovered, but their black tiger is way, way down”, said Gulkin. “Imports are still required, but the pressure is off, to some degree.”
Farmers who had been intensively producing back tiger have largely switched over to vannamei, he said.
In Indonesia, which has become a major supplier to the US market, production is a little better than last year; but not much more, said Gulkin.
For China, shrimp production is forecast to drop in 2016 and then recover next year. This means packers in China are still importing heavily.
“Demand from Chinese packers, for raw material for further processing from India and other Asian origins, remains strong, as well as South American shrimp for domestic consumption,” said Gulkin.
Bangladesh’s black tiger production is down, to some degree, and lack of output from India and Vietnam is putting additional pressure on prices, he said. “Bangladesh packers facing much higher raw material prices and bit order backlogs. Big delays are very common at this time.”