Shrimp buyers place orders in Indonesia, Vietnam, amid ‘dismal’ situation in Thailand : June 11, 2013
Eva Tallaksen, Jeanine Stewart – Undercurrent News
Some shrimp importers are placing large orders already now with Indonesia and Vietnam to secure supply, industry players told Undercurrent News.
Buyers usually wait until the end of June, around the time of the Vietfish conference, to place such orders, but the supply situation is so uncertain that orders are being placed already now, said a Europe-based industry source.
“I heard that a lot of big buyers now placing very large orders in Vietnam,” said this source. “Everyone’s been holding off for as long as possible for prices to go down, but some buyers are deciding to make their move now as prices haven’t dropped. ”
With the ponds in Thailand still dry, “lots of buyers have been forced to switch”, he said.
The situation in Thailand is still “dismal” amid the continuing impact of early mortality syndrome (EMS), said Jim Gulkin, who heads the South East Asian exporter Siam Canadian Group.
In some light at the end of the tunnel, researchers are said to be making progress on polymerase chain reaction (PCR) tests that can help detect EMS in broodstock, before putting the fry into the ponds.
However, just the delay in harvest in itself means Thai production will be down by at least 20% to 25% this year, said the Europe-based source.
Gulkin previously said the industry is expecting Thailand to produce between 350,000-375,000 metric tons in finished products, and “possibly below 350,000t”, this year. That compares to 425,000-475,000 metric tons in 2012.
Prices tell the story — ex-farm prices from Thailand are up by another 7% in this first week of June, according to data from Undercurrent’s prices portal.
Other countries are not necessarily faring much better. Although Indonesia is reportedly planning to up production by 30% this year, there is talk that Infectious Myonecrosis Virus (IMNV) is once again a problem in the country. “I’ve heard that IMNV is back in Indonesia with a vengeance,” said the Europe-based source. “It was never really gone, but they had learned to manage it.”
India, and Vietnam, are also considered as alternatives to Thailand, and India has said it plans to up production by 50,000t this year.
Meanwhile, Thai exporters themselves are looking at their neighbors to secure the supply.
China: Unclear situation
Then, there is the issue of China. In late April, Undercurrent News reported that demand from China was pushing up prices globally, in part quoting Anton Churakov, purchasing manager at the Russian importer Agama.
Now freshly back from a trip to China, Churakov said the situation in the country is looking better than it did during the Brussels show.
Harvest in China this year could end up on par with 2012, depending on weather, he said.
“China has started some harvest in April in the south, though the quantity has been quite low, but it’s very early harvest, comparing to traditional years,” Churakov told Undercurrent.
Chinese producers are reporting disease problems, but do not consider it to be EMS, he added.
Gulkin similarly said Chinese producers are reporting production will be on par with last year. However, it’s too early to be certain, and mortality rates in China are high, he said.
“My impression is that production [in China] should not drop off significantly, if at all, from last year but the high mortality rates are worrisome.” Gulkin said.
However, there are also signs that China is looking abroad to secure its supply. “China does not export much, but it’s quite affected,” said the European source. “It has reduced densities, and EMS is definitely a problem there.”
In Ecuador, meanwhile, producers are getting increasing orders and requests from China, producers said. “We get 8-10 requests for shrimp every day from new buyers [in China],” Sandro Coglitore, general manager for Ecuador-based shrimp supplier Omarsa, told Undercurrent News.
‘Long, long road’
For both suppliers and buyers, the big question is how soon farmers will be able to have EMS under control.
Although the disease’s cause has now been identified, work is still ongoing on developing diagnostic kits, and PCR tests.
“The PCR technique is being refined as we speak,” said the Europe-based source. “In the meantime, farmers in Thailand, Vietnam, China have tried to address the issue by lowering their pond density, it won’t solve the issue but it makes it easier to manage.”
A “cure” as such may also never be developed, as finding antibiotics that work but also that are legal might prove a challenge, he added.
“It might become like whitespot, where it’s a disease that producers learn to live with, and manage.”
In his view, the effect of EMS “will be there for years, not months”.
“We’ve probably seen the bottom, but it will be a long, long road.”
In part, this could be as an indirect result of the lower production , as producers reduce densities, and high mortality rates decimate crops.
“Depending on the production models in different countries and areas, the effects will be very, very long lasting,” said this source. “We’re probably going to see lower volumes at best.”
The situation will become clearer at the end of July, when the first major harvests are due. The biggest area in the south of Thailand only seeded in May.
However, all is not necessarily all bleak in the long term.
“I think some adjustment is maybe not too bad,” said the European industry player.
“All depends on how the market reacts… if this shakeup results in the market deciding to focus on traceability, value and quality and promotes that to consumers: that’s not bad in the long term. ”
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