Shrimp industry: US buying patterns have changed post-EMS : August 19, 2015
Tom Seaman Jeanine Stewart, Jason Smith – UNDERCURRENTNEWS
As the holiday buying season continues and memories of the early mortality syndrome (EMS) catastrophe start to fade, players in the global farmed shrimp market are facing a changed marketplace: American buying patterns have yet to revert back to pre-EMS norms.
America’s imports of shrimp are reportedly on track to hit a record 1.4 billion this year, indicating supply has fully recovered after volume dropped significantly during the disease crisis. But some buyers told Undercurrent News it’s too early to tell if US consumer demand has fully rebounded, a picture clouded in part because some suppliers have pent-up inventories and there is a lag in getting current data.
But buyers still appear to be buying in a more hand-to-mouth fashion than they did before EMS, when large commitments on product were typically made far in advance of shipment.
“Buyers have aligned themselves with their normal trade partners, and they’re not going outside of their circle – they’re just going hand to mouth this year,” Todd Rushing, founder of the online shrimp brokerage platform, the Shrimp Trader, told Undercurrent News.
Part of the reason seems to be that big holiday buys are simply not as necessary as they once were.
“The world is becoming flatter – there are so many efficiencies on importing that people should be literally able to pick up the phone and order from a warehouse in Thailand as they can from a warehouse in the US,” Rushing said.
Travis Larkin, CEO of Florida-based shrimp importer Seafood Exchange, said though he wouldn’t characterize shrimp demand as “depressed” for this season, he hasn’t seen it “really taking off” either.
“Traditional logic would say, well, prices got really high with the EMS problem, but now that they’ve come back down everybody’s going to get quite aggressive and trying to promote. I won’t say that’s happened,” he said.
That could be due to a lag in the time that it takes for retailers and restaurants to feature shrimp promotions now that prices have come down, he said. Or it may be simply too early to tell.
“One of the things we’ve learned in this crazy business is that when prices get really high it does take a lot longer to rebuild demand than it did to lose it,” he said.
Although this new normal in buying patterns may work during many times of year, Rushing warns it may not work so well in the lead-up to the high-demand holiday season.
He said inventory levels among importers have dwindled to the point where buyers will run out of product sources for the holidays if they do not order this month. Once the window of opportunity to get product shipped over in time for the holidays passes “It could be a rude awakening” for US buyers, Rushing said.
Previously, many savvy buyers would buy in early June just before some of the larger “Big Box” retailers would step in and push prices up and most holiday business was concluded by July,” he said.
But, this year, many overseas packers are still waiting for that “Holiday Bump”.
“If it hasn’t happened by now it may not happen at all,” Rushing said.
One reason sales are slow at this moment is because at the wholesale buyers’ inventory levels are high, Kevin Tang, CEO of Sunnyvale Seafood, the US division of Chinese shrimp exporter Zhanjiang Guolian Aquatic Products, told Undercurrent.
Tang imports shrimp not only from Guolian’s suppliers in China but also from all major producing regions, such as Ecuador, India, Indonesia and Mexico.
“It s a supply and demand issue,” he said. “I think everybody has inventory.”
Demand normally starts in April, slows down during the summer and picks up again this month. So far, this year’s demand patterns have followed the normal trend, except that demand this summer has been “slower than it would normally be”.
Compared to recent years of roller coaster pricing, the situation could be much worse.
“It’s not big demand, but the pricing is stable in the market,” Tang said.
As for whether holiday buying will begin in September, Tang said, “I hope so – I don’t see it, but they keep saying they have plenty of inventory.”
Another US-based importer who sources shrimp primarily from Asian markets and asked not to be named for this article said he sees demand as “quiet”, with some suppliers discounting in order to make sales, but this varies from market to market. In India, prices haven’t dropped too much, but in Thailand there remain opportunities for importers to find value. In Vietnam and Indonesia though, prices are moving up quickly as holiday orders come in, the source said.
In the view of Jim Gulkin, managing director of Siam Canadian, prices probably won’t go much lower. Though the devaluation of some Asian currencies may stave off price rises for now, he predicts that many farms simply won’t re-seed their ponds due to low prices.
“This all points towards tighter supply and higher prices on the way,” he said. “Some buyers are still sitting on the fence in the hope or belief that prices will drop further, but I believe that the window to buy is getting smaller by the day, and many buyers will miss the opportunity.”