Thai shrimp packers join Vietnam in looking to India : February 16, 2015
Tom Seaman – UNDERCURRENT NEWS
Thai shrimp raw material prices are rising amid very short supply in the country’s low season, with at least one large packer turning to India for product to process, sources told Undercurrent News
This adds to the ongoing trend of Vietnamese packers buying from India, as both Thailand and Vietnam looks to recover their own production after the spread of early mortality syndrome (EMS). Unlike Vietnam, the Thai government has a very lengthy inspection process for imported shrimp, meaning packers won’t import unless they really have to.
Last year, however, major packers such as Thai Union Frozen Products told analysts in February they were importing shrimp from India to cover needs in Thailand’s low season, where farmers are still slowly recovering from EMS. A Thai Union spokeswoman said the company does not plan on buying from India this year, however.
“We had done this at the beginning of the crisis. We decided that the domestic procurement is more efficient in terms of lead time and certainty on the raw material quality,” she told Undercurrent.
Last year, Thailand’s production dived to 200,000 metric tons, having been as high as 650,000t in the past.
Although the general view is production will pickup from this somewhat in 2015, it is currently the off season for farmers and prices were high, making imports viable. It only makes sense for Thai packers to buy from India or other overseas countries when there is a big gap in raw material prices, such as now, sources told Undercurrent.
In recent weeks, Indian raw material prices have been propped up by demand from Vietnam, for sale to China via Haiphong and also for re-processing. Indian prices are, however, currently much cheaper than raw material in Thailand. For 70 count, head-on shrimp raw material, the current price level in Thailand is around THB 202/kg ($6.19), whereas the same size in India is INR 280/kg ($4.49/kg).
As a result, “Thailand has now joined in [buying from India]”, an executive with an Indian packer, source A, told Undercurrent. It seems Thai processors are also making inquiries in Ecuador, where prices are also down.
A shrimp supplier in Ecuador, where prices are actually coming down, also said there has been inquiries from Thai packers.
Another Indian executive source B, played buying from Vietnam and Thailand down, however. “There has been some buying but nothing that would make a difference in pricing. Currently there is hardly any buying activity,” he told Undercurrent.
Having said that, he acknowledged the logic of the Thai need for raw material, from domestic farmers or overseas, as Thai packers always have “requirements for the value-added items which are generally long term contracts”.
In Thailand, every packer just wants to be able to secure some raw material to run through their plant, said Satasap Viriyanantawanit, general manager for Thailand with Siam Canadian Group, a Bangkok-based, pan-Asian frozen seafood supplier.
“Shrimp supply is extremely short at this moment, even though there are very few existing orders in the books of Thai shrimp processors,” Viriyanantawanit told Undercurrent.
Although Viriyanantawanit said he was not aware of any Thai processors buying from India, he said it would not surprise him, because of the raw material situation.
Some plants do have commitments and pending orders and are having to “compete and fight with each other to obtain even just a tiny amount of shrimp raw material to run through their plant”, he said.
Prices for the scant raw material available in Thailand at the moment have risen sharply since the start of the year. For 60 count per kilogram raw material, prices were THB 205-213/kg in the week of Feb. 9-14, compared to THB 185/kg for the week Jan. 12-17.
Similarly, prices for 70 count are at THB 198-205/kg for Feb. 9-14, compared to THB 180-183/kg for Jan. 12-17. For 80 count, prices were THB 193-196/kg for Feb. 9-14, compared to THB 158-164/kg for Jan. 12-17.
“We expect that supply will be improving around late March or early April starting from small sizes,” said Viriyanantawanit.
It is not a case of farmers holding back supply to keep prices up, however, he said.
Since Thailand has been suffering from EMS, shrimp prices are not the number one priority for farmers, he told Undercurrent. “Survival, at the highest possible density has become a much higher priority.”
Thai shrimp farmers just want to be able to farm as much as they can, that is their focus, said Chaiwaruth Arunsopha, who’s family owns processor Tey Seng Cold Storage and shrimp farms in Trat province, in the east of Thailand close to the Cambodian boarder.
“They don’t care much about the price at this moment. Frankly, all they care is 100% survival of their shrimp,” Arunsopha told Undercurrent.
Vietnam buying from India
In India, the vannamei price for the week starting Feb. 9 rebounded INR 10-20 across all sizes. Prices for 50 count were at INR 350/kg, 60 count at INR 310 and 70 count at IDR 280.
For Feb. 16, prices on the larger sizes have come down in India, with 50 count down to INR 320/kg, 60 count at INR 300 and 70 count still at INR 280.
In September last year, prices for 50 count were at INR 450/kg, 60 count at INR 380 and 70 count at INR 340.
This current slight uptick in prices, according to Chaipat Kunapiwatkul, business development manager with Siam Canadian, is largely due to demand from Vietnam.
“It seems that several packers are getting active in purchasing for Vietnam market again. From what we heard, the purchasing volume for China and Vietnam is likely to increase after Chinese New Year because there has been a speculation for shortage of shrimp in China by March. As a result the demand for shrimp is likely to go up,” he told Undercurrent.
Source A, the executive with an Indian shrimp processor, said he was surprised how demand has continued from Vietnam.
“Initially, I was told that they are planning for Chinese New Year, but they continue buying,” source A said.
“Vietnamese processors are buying HLSO [head-less, shell-on] block A grade from packers and doing reprocessing and value-addition in Vietnam for export to US, EU and some to Japan,” he said.
Sources have suggested the Vietnamese struggles with EMS are ongoing, as well as other problems with farming.
“Shrimp farms in Vietnam are not producing enough. I heard that Vietnam imports about 30% to total production,” said an executive with a large Thai processor with links to Vietnam, source C.
“It sounds like farming is not very promising in Vietnam for 2015, so importing raw material can be a way to maintain the export quantity,” one Vietnam-based executive, not wishing to be quoted by name, source D, told Undercurrent.
For the past one-month 10-20 containers have been moving to Vietnam, to Ho Chi Minh City, said source A.
“If it is going to Ho Chi Minh, then it means this is for reprocessing. If it is Haiphong port, it means going to China,” he told Undercurrent.
Minh Phu Seafood, the largest Vietnamese processor, imported as many as 500 containers from India in 2014 alone, sources told Undercurrent.
Executives from Minh Phu did not return a request for comment.
According to feed sector sources, production in Vietnam was 20% less than expected in 2014. “ In the first season, they reached their expectation but the second season failed, it seems,” source A told Undercurrent.
The seasonal situation in India means there will not be shrimp available in any volume until May.
In term of landings, there might also be a slight improvement in the first week of March in Andhra Pradesh but it will not likely be significant, said Kunapiwatkul.
The landing in other areas, like Orissa and Kolkata, will start again only in May. That means Andhra Pradesh is the only source for vannamei from India until May, he said. “Current availability is more on such sizes like 40, 50, 60 and 70 counts. Other sizes are relatively less.”
India’s own disease problems
India may currently be a source for other Asian countries with raw material problems, but it has its own problems with disease.
At the end of January, Durai Balasubramanian, secretary of the Pattukottai Shrimp Farmers Association (with 4,000 members), told Undercurrent India’s production of vannamei shrimp is likely to drop in 2015, as farmers face disease issues and consider a shift to producing black tiger instead.
‘Running mortality syndrome’, or RMS, is a problem currently faced by producers across Tamil Nadu and Andhra Pradesh – regions which represent 20% and 60% of the country’s shrimp production respectively, said Balasubramanian.
As a result, farmers are considering a reverse in the trend which has seen Indian shrimp production rocket in 2014 – the switch from black tiger to vannamei farming.
“There is no cure for running mortality syndrome at the moment, but lots of consultants suggested to go for better farm management practices,” said Balasubramanian.
“P. monodon [black tiger shrimp] can only be produced under low stocking densities, so production will definitely come down.”
RMS has caused pond biomass to fall substantially for many farmers – mortality rates reaching 70% in most cases, according to a report by Mastan Vali, senior scientist with India’s MAAARC [Matrix-ANU Advanced Aquaculture Research Centre].
Since October 2014, Tamil Nadu at least has struggled with whitespot syndrome as well, and stocking of ponds has been delayed. Production costs for vannamei have risen, while selling prices have dipped of late, spurring a reconsideration of which product is in farmers’ interests, said Balasubramanian.
“In the current scenario, monodon is valued highly, it will help farmers to fetch high prices. Plus the amount of investment for monodon is lower than vannamei,” he said.