Sharp drop in Thai shrimp prices as packers hold off after Boston show : March 25, 2015
Tom Seaman – UNDERCURRENT NEWS
The prices for shrimp raw material in Thailand have dropped sharply after the Boston seafood show, as packers switch tack on buying.
During the Seafood Expo North America in Boston, the picture in shrimp was very much in favor of the buyer. As a result, Thai shrimp processors have stopped buying.
This has had a rapid result on the raw material prices in Thailand, which have dived week-on-week. Prices for 60 per kilogram count head-on, raw material were THB 185/kg for the week March 16- 21, compared to THB 192/kg for March 9- 14, according to data from Siam Canadian Group.
For 70 count shrimp, prices are THB 165-182/kg, compared to THB 182-190/kg; with prices for 80 count at THB 166-168/kg, compared to THB 170-175/kg.
“Thai packers were previously hoping that the US market would be picking up and demands should be improving. They kept buying any available raw material aggressively,” Satasap Viriyanantawanit, general manager for Thailand with Siam Canadian Group, a Bangkok-based, pan-Asian frozen seafood supplier.
“However, after Boston seafood show, all of them figured it would be a waste of time to hope for something,” he told Undercurrent News.
Since, they “immediately changed their strategy and intend to slow down and are holding off buying any raw material for the moment”, Viriyanantawanit said. “Most of packers are not buying any raw material for the moment. This takes the heat off the market.”
The outlook, according to Viriyanantawanit, is that prices should continue to come down in Thailand. When they do, more orders should come and prices firm up again. Prices in India and Ecuador actually picked up post-Boston, driven by demand from China and Vietnam for raw material.
High labor costs and a focus on value-added production mean Thailand has to look very much to the US, however. Even more so in 2015, with the loss of the preferential tariffs for sale to the European Union under the Generalized System of Preferences (GSP) scheme.
In 2015, processed shrimp products from Thailand lost preferential access to the EU markets, with raw shrimp having lost the preferential rate in 2014. GSP expiration means an increased tariff rate to 20%, from 7% for processed products, while frozen shrimp products now trade at a rate of 12% as opposed to 4.2% .
In its 2014 annual report, Thai Union Frozen Products spoke of the importance of gaining a free trade agreement quickly, and of improving in other areas, to ensure Thai products can remain competitive for European buyers.
With the weak Canadian dollar and Japanese yen, Thailand is left with the US as the “only option”, said Viriyanantawanit.
“We have to always try to be competitive. There is no other option,” he said.
“Thai farmers may not be too happy, as they have enjoyed high prices over the past two or three years, but they also have no other choice. Unless farmers want their shrimp to be born, raised, die and be buried in Thailand.”
Thailand has been “taking too long a vacation” from markets, he said.
“This year, farmers may have to live with low prices, as we have to compete with other origins in order to keep our place in the market,” said Viriyanantawanit.