Asian shrimp prices, production on the move in line with rising demand : August 15, 2017
Jason Holland : Seafood Source
Overall, shrimp production in Asia will increase by 5 to 10 percent this year compared to 2016, but there will continue to be some important anomalies in key production regions, anticipates Jim Gulkin, managing director of the Bangkok-based Siam Canadian Group.
Thailand’s production is up this year, with Gulkin telling SeafoodSource that he expects an increase of between 10 to 15 percent over last year. But he added that the competition for raw material between processors is very strong, with many orders on the books from major U.S. retailers and quick service restaurant (QSR) chains.
“Farmers this year are targeting larger sizes and the medium and smaller sizes which Thailand farmers have traditionally harvested are in much shorter supply,” he said. “In addition, Chinese brokers have been buying heavily this year, purchasing directly from the ponds and hiring very basic processing facilities to pack HLSO (headless shell-on) into blocks and shipping them to China.”
This has added a lot of pressure to raw material prices, and consequently Thailand’s shrimp prices will remain ﬁrm for the remainder of 2017, he said.
In Indonesia, shrimp prices have generally been competitive this year vis-à-vis other Asian origins, but the country also struggles with disease issues that have impacted its production. While increased farming areas have mitigated these challenges to some degree, Gulkin believes that Indonesia’s production this year can be expected to be in the range of 5 percent lower than 2016.
But the country should have increased production starting in October or November, he said.
China’s shrimp sector has also continued to be challenged this year with disease, industrial pollution, poor quality post larvae and poor quality feed all contributing to its production problems. Indeed, the country’s ﬁrst shrimp crop of this year was considered a failure, said Gulkin.
Consequently, China has and will continue to depend on other Asian origins, as well as Latin America, for shrimp supplies to meet the demand of the domestic market as well as for its processors.
While, Vietnam’s vannamei production improved during the course of 2016, the country still ﬁnds itself needing to import raw material from India and other Asian origins as local production is not suﬃcient enough for processors’ requirements. In addition, Chinese brokers have been buying heavily from Vietnamese farmers directly.
In some cases, they use basic processors to produce HLSO blocks, but for the most part, this raw material is shipped fresh across the border, explained Gulkin.
Meanwhile, black tiger shrimp remain in strong demand and prices continue to be high. Prices for both vannamei and black tigers from Vietnam will remain ﬁrm at least through the second-quarter of 2018, he said.
In India, vannamei production is expected to increase by 10 to 15 percent in 2017 compared to last year, with the country also actively working to overcome its production and capacity issues.
“India faces many challenges with diseases, as do other countries, but the farming area is increasing as [is its] processing capacity in terms of new factories as well as the expansion of existing factories. India’s raw material landings were very high in early July and raw material prices started to move down as a result. However, as the processors had many orders already on their books and anticipated that landings would drop considerably into July, C&F (cost and freight) prices never moved down signiﬁcantly. This main harvest has mostly ﬁnished and raw material prices have moved back up as a result.”
Gulkin added that India’s shrimp processors still have signiﬁcant orders to ﬁll and as the country’s production peak has now passed, prices can be expected to remain ﬁrm through at least mid Q2 2018.
Prices for black tiger shrimp from Bangladesh will also be ﬁrm this year – in line with a production level that is on par with last year and below that of 2015.
In terms of end consumer markets, the demand from and consumption in the United States, Canada and China has been strong this year, while Japan is “mostly static,” said Gulkin. In Europe, the shrimp market is still on the soft side, but there has been some degree of improvement this year compared to 2016. In particular, there has been a signiﬁcant upturn in U.K. consumption.
“In terms of origin pricing, the bottom of the market has come and gone. Expect prices to move up some degree, although nothing cataclysmic. Prices will remain mostly [at these levels] from most origins well into Q2 2018,” said Gulkin.