Gulkin: Global shrimp market bottom ‘very close’ as major buying gets underway : May 15, 2018
The bottom of the global shrimp market is “very close” as major purchases for the year-end get underway and more are expected to start in the weeks ahead, Jim Gulkin, CEO of Siam Canadian Group , told Undercurrent News.
Gulkin, whose Bangkok, Thailand-based frozen seafood company has offices across Asia, said the bottom will come as an abundance of small shrimp hits the market, due to early harvesting.
“We are seeing substantial volumes of both raw and cooked 71/90 across Asian origins. Many more small sizes are being landed in Thailand, Indonesia, India and Vietnam,” he said. The volume of small sizes is “particularly unusual” in India, Indonesia and Vietnam, he noted.
A halt to dropping prices will be welcome relief for shrimp producing countries who’ve suffered a price rout. Farmgate prices for vannamei shrimp in major-producing countries have plummeted (see Undercurrent News’ prices dashboard), due to several key factors.
“Although the market continues to be weak and low prices are prevalent, bottom of the market is very, very close. Major year-end purchases are already underway and more will start in the weeks ahead. A few more major retail purchases will be enough to draw a line under the market,” he said.
“Buyers who are still on the fence ‘waiting for the bottom’ may find themselves on the wrong side of the curve.”
For those farms that are harvesting early, lower quantities of medium and large sizes harvested going forward will translate into lower overall quantities. Production is also expected to fall as farmers reduce stocking in the next farming cycles.
Hence Thailand, originally projected to produce close to 350,000 metric tons for 2018, will likely produce closer to 300,000t, he reckons. Production estimates for Vietnam, India and Indonesia are also all being revised downwards, he said.
“Exceptionally low raw material prices and ongoing losses for farmers are forcing farmers to reduce new pond seedings or step back altogether for the next crop(s). As a result of farmers backing off production to varying degrees, we expect to see raw material landings tightening up, probably in August.”
That month, he noted, processors across Asia will move into the peak production period to cover year-end orders. Recently, processors told Undercurrent they fear being squeezed by a raw material price rebound when this happens.
Gulkin expects to see raw material landings to continue to drop through Q4, and well into 2019. Until raw material prices recover, farmers will continue to go slow on production, he said. “It is likely production will not substantially increase before end Q2 or into Q3 2019,” he added.
Meanwhile, in Indonesia, farmers will complete harvesting the majority of their farms over the next few weeks, prior to the end of Ramadan and the long Eid el Fitr holiday. After the holiday Gulkin expects raw material prices to move up.
“Raw material prices in Thailand, Vietnam, India and Indonesia are all well below production cost at this point. Farmers throughout Asia are suffering substantial losses,” he said.