Slack demand softens prices for US tilapia imports from China : July 15, 2015
Matt Whittaker Neil Ramsden, Tom Seaman
Prices for US imports of tilapia from China remain soft amid high inventories and sluggish demand for the whitefish from the Asian nation.
Importers in the United States, the biggest market for Chinese tilapia, haven’t been promoting the fish as much over the past couple years as prices have remained high. And Chinese factories have been slowing down shipments to the US as the Food and Drug Administration has rejected some containers because of concerns about a pharmaceutical ingredient.
Currency depreciation against the dollar in Mexico, the No. 2 market for Chinese tilapia, and Russia, the third largest market, has also hurt demand for Chinese product. Meanwhile, the weakness of the euro is dampening demand for Chinese tilapia in Russia and African nations, as they depend upon the European Union for trade.
With demand slack in their top three markets, Chinese farmers have not been able to sell as many fish, leaving raw material inventories high at farms from March through June, Landy Chow, who runs Bangkok, Thailand-based Siam Canadian Group’s office in China, told Undercurrent News.
Additionally, with the US market seeming satisfied at the moment, some processing plants in China have accumulated volumes of frozen fillets, Don Kelley, procurement manager with Western Edge Seafood, told Undercurrent.
“Demand is weak as importers are still trying to lower their inventory levels,” Jason Carter, sales director and co-founder with China tilapia farmer and processor Elite Seafood, told Undercurrent.
According to the Undercurrent price portal, farm prices for whole, live tilapia weighing 500-800 grams from China in June were down 6.3% to CNY 7 ($1.13) per kilogram, from CNY 7.47 in May and off 28.6% from CNY 9.8 in June 2014.
Some packers are exporting 10-pound boxes of 5-7 ounce individually vacuum-packed fillets at about $1.65-$1.70/lb carriage and freight to Los Angeles, down from $2.15-$2.20/lb.
“The drop is huge,” Chow said.
In the January-May period, US imports of fresh and frozen tilapia from China rose 14.1% to 69,400 metric tons year on year, from 60,800t in the first five months of 2014, according to National Marine Fisheries Service data.
But the spend on those imports rose only 1.5% to $287.1 million, from $282.9m.
That brought the average price per kilogram for fresh and frozen products to $4.14 in the first quarter, down 11% from $4.65 the same period a year ago.
There has been a slight increase in demand this month, but the price picture going forward remains murky given uncertainty about what packers will sell their inventory for and when demand will increase more robustly, Carter said.
Market demand for June and July has been better than March to May, but still not so good, Chow said.
With a farming cost of CNY 8/kg but July ex-farm prices at CNY 7.20/kg, farmers are stocking fewer juvenile fish, Chow said.
“So most of the packers believe that there should be a short in supply starting from August 2015,” Chow said.
Additionally, farmers tend to delay harvesting when prices are low, meaning there is less room to stock new fish, Kelley said.
But the higher inventories will cushion the shortage of raw material, delaying the feeling of shortage until late this year, he said.