Asia's first-half shrimp production hinges on disease issues : February 13, 2017
Chinese, Vietnamese shrimp production took big production hits over the past 12 months.
Kim Tran – INTRAFISH
Shrimp production was lower than expected in some Asian countries last year while others are struggling more than others, such as China and Vietnam.
Overall, 2016 global shrimp production increased with the most gains in Ecuador and Thailand while Chinese demand expanded in all areas, according to the shrimp panel at this year’s NFI GSMC.
Shrimp supplier Siam Canadian estimated the total shrimp harvest for China last year was 650,000 metric tons, head-on weight, with about 80 to the domestic market and 20 percent to vannamei exporters.
“Information we have is that 2016 harvest was down about 10-15 percent from 2015,” said the company. This is better than 2015 production, which was down 20-30 percent compared to 2014, said Jim Gulkin, managing director at Siam Canadian.
The GSMC shrimp panel presentation stated Chinese shrimp production is down 150,000 metric tons in 2016 from 2015, mainly because of lower production in the Guangdong region.
“They don’t have the proper farming infrastructure,” Gulkin told IntraFish. “There are many small farmers just trying to survive so they’re not taking precautions for disease, they’re buying larvae from cheap hatcheries, which are not strong enough to survive, they’re using cheap feed and there’s industrial pollution. There are no big farming groups where they get together and find solutions and improvements.”
The GSMC shrimp panel presentation showed another significant dip in the estimated 2017 shrimp production for China, year-on-year.
Last year China was the sixth largest exporting country to the United States, exporting 34,829 metric tons of shrimp, 22 percent more than 2015, according to the most recent statistics released by the National Marine Fisheries Service (NMFS).
Vietnam’s black tiger shrimp production is down 30 percent in 2016 due to severe problems with drought, which caused salinization of pond areas, Gulkin said.
“A lot of the growing areas were affected and black tiger shrimp was affected more than vannamei. Vannamei production is about the same as last year,” he said. “Vietnam still relies heavily on India for raw material for processing.”
Last year Vietnam was the fifth largest exporting country to the United States, exporting 63,413 metric tons of shrimp, 5 percent more than 2015.
In the GSMC shrimp panel presentation, the country is importing more shrimp each year with Ecuador and India at the top of its import markets for shrimp.
Meanwhile, India did not fair as poorly as Vietnam. Despite an “impetus” to increase 2016 production over 2015, the country is actually down about 5-10 percent due to production issues with disease, said Gulkin.
“At best they will match last year’s  production, but overall, they had a good year in terms of shipments to the US.”
Devi Seafoods’ Sree Atluri said during GSMC the country has struggled with disease — such as white spot and EHP — in the shrimp farming sector for the past few years.
India production has stabilized in the last two years, said Atluri. Production was expected to drop in 2016, but as the end of the year approached, production improved and 2016 is predicted to see a 5 percent increase in shrimp production, year-on-year.
Alturi said there are new farming areas in India and there are also more crop cycles: 2 to 2.5 cycles per year.
“There’s also strong demand from Vietnam and China,” Alturi said. “Pricing will be a big factor going forward in the next year for production.”
Gulkin also predicts a positive outlook for India because in recent years the country saw factory expansions as well as new ones “so it seems it’s bound to increase going forward,” Gulkin told IntraFish.
However, the country may also face struggles with the falling value of the Indian rupee, which taking its toll on shrimp farmers who are struggling to buy feed and also pay laborers.
Last year India was the largest exporting country to the United States, exporting 153,984 metric tons of shrimp, 14 percent more than 2015.
India switched away from black shrimp in recent years. Three years ago, black tiger shrimp accounted for 30 percent of its production, last year it was 10 percent and this year Gulkin predicted it will be less than 5 percent.
This, coupled with Vietnam’s plummeting black tiger shrimp production, is putting market pressure on Bangladesh. However, the country is struggling to meet demands with problems such as delayed shipments.
The GSMC shrimp panel presentation showed estimated growth, although small, each year for overall shrimp production for Vietnam. White shrimp production gains as black tiger shrimp production slows each year, including the estimate for 2017.
However, during GSMC, Sea Port CEO and NFI Shrimp Council Chairman Bill Dresser said it would be wise for Vietnam to increase its black tiger production, a move that could be a positive for both Vietnam and for shrimp consumption in the United States.
After struggling with disease in 2013, the industry is plagued by reluctant banks and high interest rates. With many ponds fallowed, the government’s estimates “will be a struggle,” Dresser said.
Though government estimates are higher, NFI panelists are anticipating some 250,000 metric tons of ouput.
But Dresser encouraged producers to think quality, not quantity.
“Black tiger pricing is at an all time high, so it would be attractive and prudent for Vietnam to increase that production,” he said. Although black tigers grow slower and require lower density, the demand is there, particularly with Mexican wild shrimp leaving a void.
“If they would put their attention to black tiger, that would be a good thing,” he said.
Vietnam continues to face US market headwinds, making the higher price premium for black tigers even more attractive. Producers — with the exception of one — still face a 4.78 percent duty country-wide.
Gulkin said another country that wasn’t performing as well as expected is Thailand.
“Thailand was much improved over last year as they’re continuing to get EMS [Early Mortality Syndrome] and other disease problems under control,” said Gulkin. “But production is still less than people expected after the second quarter because of some disease issues, such as white spot, and heavy rains.”
Also, Thailand was doing “great until last quarter.” The country was growing its shrimp to larger sizes than normal, but not able to move the inventory as easily as hoped.
One member of the GSMC shrimp panel said Thailand saw a good 2016 in terms of shrimp production with an additional 50,000 metric tons, but there was a slowdown in the last quarter with indications of EHP issues. Despite this, the outlook for 2017 is generally optimistic.
Pond yields have never been higher and farms are putting money back into the ponds. With renovations leading to success, more farms are following suit so more pond renovations are expected for 2017, according to the panel.
Last year Thailand was the third largest exporting country to the United States, exporting 81,151 metric tons of shrimp, 10 percent more than 2015.
Meanwhile, Indonesia is down 5-10 percent in production last year over 2015 because of white spot and other diseases. Sumatra is ramping up production but at higher densities — “there’s some risk so we’ll wait to see what happens there.”
The GSMC shrimp panel presentation also shows this drop from 2015 to 2016 but also shows an estimated increase in 2017 for shrimp production.
Another potential on Indonesia’s horizon is the recent to news that the country invited Norwegian investors to develop the country’s shrimp industry, which is estimated to require IDR 30 trillion (€2.1 billion/$2.2 billion) to unlock its multi-million dollar a year business potential.
However, right now Indonesia is the most competitive region in Asia because it is its traditional peak season from November to February, Gulkin said.
“The sales we’re seeing going into US and Canada, Indonesia seems to be leading the pack,” said Gulkin.
The GSMC shrimp panel presentation shows US share of Indonesian shrimp is predicted to fall from 60 percent to 55 percent from 2016 to 2017 while Japan and China will gain 2-3 percent in market share: Japan up from 16 to 18 percent and China up 7 to 10 percent in 2017.
Last year Indonesia was the second largest exporting country to the United States, exporting 117,095 metric tons of shrimp, 2 percent more than 2015.
Check out this drone footage of the world’s largest shrimp farm, which is located in Sumatra, Indonesia.
Gulkin told IntraFish in a previous article good shrimp sales to the United States earlier in the year may have built up US inventory and “prices haven’t moved to match rising prices from the countries of Asian origin. Right now there’s a disconnect where US prices are lower than what people are selling for from Asia.”
“I see the same global shrimp supply for the first half of next year,” said Gulkin. “I don’t see any strong reason for origin prices to go down.”
The GSMC shrimp panel agreed saying there will be light production in the first half of the year.
Gulkin added India will not see good production until April or May since its east coast region will come out of its cycle and start reseeding in late January or early February.
Thailand is coming out of its cycle too so seeding will start up soon. “We’re in cool season so depending on weather, we’ll see when Thailand starts harvesting; normally it’s in April or May when they get back into gear.”
Vietnam’s production won’t be picking up until April or May as well, and China’s main seeding is late March with the first harvest at the end of June and the peak harvest in August and September. “The 2017 production will depend a lot on disease, which has been the main risk for farmers. If disease improves in the first half of 2017, we may see more seeding at the end of the second quarter,” he said.
The GSMC presentation shows an estimated increase for 2017 for Vietnamese overall shrimp production.
Siam Canadian predicts the Chinese shrimp harvest for 2017 will be on par with 2016, but “in fact it is much too early to accurately predict. Too many factors remain unknown,” said the company.
China imported about 100,000 metric tons of shrimp last year, with 70 percent staying domestic and 30 percent for further processing and vannamei exports; however, “there is no solid data to back this up, this is mostly anecdotal.”
“Shrimp consumption continues to grow in China. Assuming no major increase in shrimp production, expect China prices to be relatively firm in 2017,” he said.
“Expectations are imports into China for both domestic consumption and further processing and vannamei exports will increase in 2017.”
While shrimp supply to the United States was strong last year, the GSMC presentation estimated China will compete strongly for that market share in 2017. Exports to and within Asia doubled in the last five years.
The panel also said US imports will continue to focus on larger sizes. Meanwhile, the wild shrimp market in the United States is changing and there are some reports of shrimp inventories following holiday sales