Ecuador shrimp prices fall on weak US, Chinese demand : July 10, 2015
Alicia Villegas : UNDERCURRENTNEWS (With additional reporting by Tom Seaman)
Strong Ecuadorian shrimp supply coupled with slow demand from the US and China have seen prices decrease, several sources told Undercurrent News.
As industry players forecasted a month ago, the bounce in prices seen after this year’s Brussels show was short-lived, and prices to the US are now down by around $0.10 per pound on average; while prices for Spain have dropped about $0.20 per kilo or $0.30/kg, depending on the size.
US buyers are still holding back on making big commitments on shrimp, while Ecuador’s volumes “are strong” this year, a US importer said.
The importer estimated Ecuadorian shrimp production for last year at about 281,000 metric tons (620m pounds), while production in 2015 is projected at 317,000t (700m pounds), up 12.8% or 36,000t year-on-year.
“Ecuador used to have very low density, then they increased, as prices were so strong,” an executive with a major shrimp company said.
“I am hearing they are scaling back on stocking and realized they have made a mistake with increasing production as they have,” the source said.
Rumors of disease problems in Ecuador, ruled out by the country’s authorities, might be related to a more heavy stocking, to increase production, he said.
Another source with a shrimp processor said Ecuador’s farmers are already lowering densities.
Ecuadorian shrimp prices have been under pressure as imports into China via Vietnam — the so-called “backdoor” — have stopped, several sources said.
As it happened last year, Ecuador’s shrimp sales have been impacted by the Chinese crackdown on shrimp being imported to the Vietnamese port of Haiphong, in the north of the country close to the border with China, then smuggled across the border.
Also, the price drop in India, putting farmers below the break-even point, will see lower shipments from Ecuador to both the US and China markets, Jim Gulkin, managing director of Bangkok, Thailand-based Siam Canadian Group.
Amid a lack of a “big buy” from the US and some emergency harvesting from farmers, prices have come down for all sizes in Andhra Pradesh, India’s main farming area; even for the small sizes that have been holding firm.
Lask week, Undercurrent reported prices in India were down between INR 20-30/kg across all sizes, whereas the smaller counts, the 90/kg and 100/kg count, were down INR 30/kg, because of emergency harvesting.
“As India prices have declined, Ecuador sales to China have slowed. Lower Ecuador prices are a result of both slower sales into the US and China. Also, Europe buying is rather tepid,” Gulkin said.
US: No ‘big buy’ yet, weak consumption
According to the US shrimp importer, consumption of shrimp in the US is weak, as major retailers have not shown a commitment to make the “big buy” yet.
Apart from Costco Wholesale, which has bought volumes from India and Thailand, retailers such as Walmart or foodservice giant Sysco have not bought big volumes of shrimp, the importer said.
“Demand will re-activate in, at least, six months’ time, when the end consumer starts noticing the drop in prices. So far, we haven’t seen a hike in consumption, this is why I think Ecuadorian shrimp prices will remain low until Christmas this year,” he said.
Prices for headless shrimp, FOB Guayaquil, have decreased about $0.10/lb on average since a month ago, to $4.15/lb for 26-30 count; $3.65/lb for 31-35 count; $3.15/lb for 36-40 count; $2.90/lb for 41-50 count and $2.65/lb for 51-60 count.
“Last week was the first time in three years that 41-50 count shrimp prices going below $3/lb,” the importer said on July 2.
According to another US source, last week’s ex-farm prices of headless, shell-on shrimp (HLSO) for 21-25 count ranged from $3.30/lb to $3.80/lb; from $2.90/lb to $3.20/lb for 26-30 count; from $2.70/lb to $3.00/lb for 31-35 count; from $2.45/lb to $2.60 for 36-40 count; from $2.20/lb to $2.40/lb for 41-50 count and from $1.90/lb to $2.05/lb for 51-60 count.
Spanish processors affected by weak euro
In Spain, where demand has recently been active for the holiday season, prices of Ecuadorian shrimp are also down.
Head-on shrimp prices have dropped by $0.20-$0.30/kg, depending on the size, an executive with a shrimp processor said.
“Prices for sizes ranging from 40-60 count have not decreased, though, as there’s no availability,” the source said.
A month ago, a Spanish buyer said head-on shrimp prices, FOB Guayaquil, were at $7.30/kg for 40-50 count, $6.80/kg for 50-60 count and $6.40/kg for 60-70 count.
Although shrimp prices have gone down, European shrimp processors will not benefit from the drop, as the euro currency remains weak, he said.
Far from a recovery, the euro remains weak, as the Greek debt crisis’ latest developments are impacting the European currency.
Thus, the strong dollar against the euro is still impacting the European market, which is taken in consideration to determine the right prices in Europe, a major European shrimp processor said at the time.