Shrimp buyers wary of price crash, countervailing duties : May 9, 2013
Jeanine Stewart : Undercurrentnews
Despite the uncertainties in shrimp supply this year, US buyers are hesitant to secure access to product too soon, wary that the current high price level will drop before they can sell.
“I am not telling anyone to buy big right now,” Eric Bloom, CEO of Eastern Fish Company, a New Jersey-based supplier, told Undercurrent News on Friday. “I think ultimately, at least certain sizes…there’s a possibility of prices backing off in the next two to three months.”
US buyers are holding off on buying until summer time, a shrimp producer based in India told Undercurrent.
On top of price uncertainty is the uncertainty over what the duties on shrimp will be after May 28. That’s the day the US is scheduled to announce whether it intends to impose countervailing duties on six shrimp export countries, including Thailand, China, India, Malaysia, Indonesia, Vietnam and Ecuador.
California-based Certi-Fresh Foods is also avoiding collecting any inventory of shrimp, although holding off on buying completely is not possible.
“We are [holding off] to the extent that we can, but we’ve got contracts, we’ve got customers that want shrimp, so we can’t really hold off,” chief operating officer Scott Obel told Undercurrent. However, ”we’re not stocking up on shrimp, that’s for sure,” he said.
Even as buyers hold back, prices for shrimp from India hang at the sky-high level of $6 for 16-20 count headless, shell-on vannamei, an Indian shrimp producer told Undercurrent. That size and specification is not even available from Thailand at the moment, Siam Canadian group managing director Jim Gulkin told Undercurrent.
“Generally, after Chinese New Year, shrimp raw material prices on all sizes moved up considerably,” Gulkin said.
Some sizes, such as 60 pcs/kg head-on, went up from THB 135/kg to THB 215/kg.
Peak in sight
But at this point, the high prices may have reached their limit. There was a hint of price softening on prices from Thailand this week, with raw material prices easing up by THB 5-10/kg, Gulkin said.
“We are seeing more offers coming in from Thai packers as a result,” he said. “The outlook is becoming more optimistic, so although I do not expect any real price drops at this time, I think further increases are less likely.”
A new normal for India?
Even if prices came down by a dollar, they would still be 43% higher than they were at the lowest point last year for Indian producers.
“Last year, it went as low as $3.70 to $3.80 and sometimes even to $3.50, and today you are talking as high as $6 – it’s a big increase,” a source from a shrimp producer in India told Undercurrent, referring to 16-20 count headless, shell on vannamei from India.
Producers were losing money on the product last year, as it was “much below the production costs,” the source said. He anticipates prices will settle slightly lower, although it is hard to say how soon.
“A good price for a buyer and a seller is something around the $5.50 level [this year],” the source said.