Gulkin: Indonesian shrimp prices ‘competitive’, while US demand ‘decent’ : Feb 26, 2019
Louis Harkell: UnderCurrentNews
Indonesian shrimp has been price competitive so far in 2019, though India, Thailand, and Vietnam are expected to gear up production in the coming months, according to Jim Gulkin, CEO of Siam Canadian Group.
Meanwhile, Chinese consumer demand for shrimp is “reasonably strong”, he said, and the outlook for 2019 is largely positive. But European demand is flat while the US still has large pockets of inventory, although demand there is still “decent”, according to the executive and founder of the global seafood sourcing and exporting business, which is based in Bangkok, Thailand and has offices in China, India, Indonesia, Vietnam and Myanmar.
“[We are] expecting Indonesia prices to start moving up over the next few weeks as production slows down. But Indonesia production should be strong again in late Q2 and early Q3,” Gulkin told Undercurrent News. Indonesian prices have been generally competitive with India, Vietnam and Thailand “having difficulty competing on some items”, he said.
He said Indonesia produced 425,000-450,000 metric tons of farmed shrimp in 2018, according to estimates.
As for India, the world’s largest shrimp exporter, production has tightened with prices moving higher in the past several weeks, he said.
“The question is are prices high enough to incentivize [Indian] farmers to aggressively seed ponds for next crop production? It seems likely that the answer is yes, and that production in India will be good in Q2 and early Q3.”
India exported 564,311 metric tons of frozen shrimp products between Jan-Nov 2018, worth $4.30 billion, up 8% in volume but down 5% in value compared with the same eleven-month period in 2017, according to latest available trade data from International Trade Center (ITC). Values dropped following a slump in prices in Q2 of last year (see chart one).
Thailand’s production, meanwhile, “is still not moving into high gear”, noted Gulkin.
“[Thai] production should increase to some degree in 2019 but [we are] not expecting any seismic change”, he said. Thai production was estimated to have been between 250,000-270,000t last year, after contracting by about 10%, he said.
Meanwhile, estimated Vietnamese production for 2018 is over 700,000t, including both black tiger and vannamei shrimp, with “modest growth” expected for 2019.
In 2018, Thailand exported 143,107t of frozen shrimp products, worth $1.49bn, down 22% in volume and 21% in value compared with 2017, according to ITC.
Shrimp exports from Thailand, where Siam Canadian is headquartered, plummeted in 2013 due to an outbreak of shrimp disease early mortality syndrome, and have yet to recover (see chart two). The country’s farmers and processors were also hit last year by the global crash in shrimp prices; last summer Thai processors suffered the “worst sales slump in history”, while farmers required a lifeline in the form of a minimum price guarantee.
However, Gulkin reckons export figures don’t take into account volumes potentially headed to China through Vietnam.
He reckons Thai exports to Malaysia and Singapore are also possibly not documented.
Chinese farmers still face challenges
China, on the other hand, will continue to struggle as farmers suffer from poor pond management, as well as industrial pollution resulting in disease problems and overall high mortality rates, said Gulkin, which have made farming shrimp “an uncertain proposition”.
He reckons Chinese production in 2018 was somewhere in the neighborhood of 700,000t. “[We] might see some increase in China production for 2019, but it is unlikely to be significant,” he said. Good outlook for Chinese domestic demand should keep farmgate prices there buoyant, however.
China’s shrimp season starts in May to June.
Meanwhile, US demand is “decent” with retailers continuing to place orders, noted the executive.
“But there are big pockets of inventory throughout the country particularly in the food service sector so from a distance demand looks uneven. Regardless, outlook for US demand is good for 2019.”
Europe demand is flat, on the other hand, and expected to remain so in 2019, he said. “Brexit, weak sterling and euro, and slowing economies are all having an impact.”
But, while he cautioned prices before the Seafood North American show in Boston in March could rise as supply tighten in the short-term, Undercurrent notes wholesale shrimp prices in China were expected to jump ahead of Chinese New Year, but then didn’t, after an influx of shrimp imports from Saudi Arabia.
In China, now one of the world’s largest shrimp importers, wholesale prices for large-sized shrimp in the country are expected to fall in the short-term.