Indian shrimp packers hope rising prices will see US buyers come in : July 14, 2015
Tom Seaman – UNDERCURRENT NEWS
Indian shrimp farmers and processors are hoping rising prices, albeit from a low level, will stimulate buying from the US and other markets.
Prices in India — where farmers have dramatically increased production of vannamei, supplying 108,664 metric tons to the US alone in 2014 — have been on the slide. They have now stabilized and are rising again.
According to reports from Indian shrimp sector sources, farmers are delaying the harvest and prices are up INR 30-50 per kilogram across all sizes on July 13, compared to the week before.
The low level the price dropped to has been bringing some buyers back in, sources said, both in the US and also in Vietnam and China, where the second seasons are yet to start.
Volumes, particularly in Andhra Pradesh, are down, as farmers “play the game” and delay the harvest, one executive involved in the Indian shrimp business, not wishing to be quoted by name, told Undercurrent News.
Prices in Andhra Pradesh, the main production region, are actually higher than in other areas, such as Orissa and Kolkata, due to the slow landings, the executive, source A, said.
Buyers, especially those in Vietnam, are trying to use the lower price in Orissa and Kolkata as a benchmark to negotiate with packers in Andhra Pradesh, he said.
Some packers in Andhra Pradesh have dropped their prices as a result, but face losses on these deals, said source A.
In, Tamil Nadu, the state south of Andhra Pradesh, the harvest is also slowing down, said Durai Balasubramanian, secretary of the Pattukottai Shrimp Farmers Association, which has 4,000 members.
“Most of the farmers finished harvesting and most of them experienced losses due to low prices,” he told Undercurrent.
The first executive, source A, said the average production cost for farmers is around INR 250/kg ($3.94/kg), with prices now ranging from INR 420/kg ($6.16/kg) for 30/kg count, INR 250/kg for 60 count and INR 200/kg for 100/kg count.
Prices are up more on the smaller sizes, with 100 up INR 50/kg in a week, while 60 count is up INR 40/kg and 30 count INR 30/kg.
One US-based executive, importing from India, source B, said he feels prices have hit the bottom. “Demand in the US is quiet, but they are buying. Several big US retail buyers are also still to make a move for the holidays, this should come from now until August,” source B told Undercurrent.
US buying is starting and also Indian packers have pending orders for Vietnam, where the main season is yet to start.
As for production, “we are at the peak now; it will dip off”, he said.
As India comes to the end of its peak production season, China and Vietnam are about to start their second crops.
China prices need to come down
In China, the market pressure is high, said Landy Chow, who runs Bangkok, Thailand-based Siam Canadian Group’s office in China.
Prices in China have come down a lot, but they are still well above the level seen in India.
“So, China has to come down in price to reduce the gap,” Chow told Undercurrent.
If the prices in China continue at the current level, said Chow, more imports from India and other countries is inevitable.
If China prices drop more in the coming two months, imports from India and Indonesia will still be there, but in much less quantity, he said.
China’s first crop harvest was not good, with losses in some areas of as much as 60% of the shrimp. “So, the China raw material price depends on the second crop, which will be harvested at the end of July or early August.”
Another source in the China shrimp business, not wishing to be quoted by name, agreed with Chow’s assessment.
“There were quite a lot of mortalities [in China]. Demand was weak, however, and therefore prices did not move up,” the executive, source C, told Undercurrent.
“Now, it seems demand [in China] is slightly up. New raw material is not as much as hoped for. Prices for small sizes, for export, are rising,” he said.
“There are still no large sizes in China, so imports of mainly 40/50 and 50/60 are increasing, and Ecuador prices have gone up a bit,” said source C.
The prices for top quality fresh shrimp raw material in China are RMB 32/kg ($5.15/kg) for 100/kg-count size, RMB 42/kg for 80-count and RMB 50/kg for 60-count, said Chow.
For normal quality shrimp bought on the market, prices are RMB 27/kg ($4.35/kg) per 100-count, RMB 35/kg for 80-count and RMB 39/kg for 60-count.
Even for the lower quality raw material, prices in China are way above India, where 100/kg-count is at INR 170/kg ($2.68/kg).
Farmers can still make money at this level, however.
“Because the farming cost in China is about RMB 20/kg, so the farmers still have margin,” he said.
Vietnam taking advantage of low India prices
Packers in Vietnam have also been taking advantage of a good price difference between their own shrimp and imports from India, said source D, an executive in Vietnam who did not wish to be quoted by name.
Indian packers have been dropping prices and attracting some buyers in Vietnam, he said.
The second crop in Vietnam is usually a little less than the first, said source D.
“This year, due to the low raw material price at the beginning of the year, stocking was really below the standard level. So, the second crop can be more. It all depends on the price this next month. Let’s see,” he said.
There is some concern over reports in the Vietnamese media that there has been heavy mortalities in Soc Trang.
“The feeling is this is just rumor to push prices up,” he said. One thing is certain, however. “If the price is not good, the farmers are not interested.”