Thai shrimp prices fluctuating as peak supply time nears, packers hope for drop : July 29, 2015
Tom Seaman : UNDERCURRENTNEWS
Shrimp raw material prices are fluctuating in Thailand, as packers wait for the peak supply season, with differing views on what total output will be in 2015.
“Right now, the raw material prices in Thailand are up and down, depending on demand and supply,” said Rittirong Boonmechote, president of the shrimp business unit of Thai Union Frozen Products, now the largest shrimp processor in the country.
Prices for raw material have been fluctuating around a similar average level. Although the Undercurrent News prices portal shows a relatively steady price for the last few weeks, sources said prices have been going up and down on a daily basis around this.
The latest prices for shrimp raw material in the country for July 20-25 are THB 165/kg for 60 count per kilogram shrimp; THB 155-162/kg for 70 count; and THB 150-151/kg for 80 count.
At the start of May, prices for 60 count were at THB 150-155/kg; THB 135-143/kg for 70 count; and THB 115/130/kg for 80 count.
Although Thai prices are down a lot on the same time last year when 70 count were at THB 205-212/kg, from which the current level is a drop of 33% year-on-year, they are still more expensive than Thailand, Indonesia and Ecuador.
“Thai raw material price was at high level, so it has to adjust to follow the world market,” said Boonmechote.
This has to continue for Thailand to compete, sources said.
“I personally believe that prices will be fluctuating between now through August,” said Satasap Viriyanantawani, general manager for the Thai business of Siam Canadian Foods, an Asian frozen seafood supplier headquartered in Bangkok.
“Sometime in August, supply on small sizes will start improving and prices on those small sizes will start to come down. September and October should be peak production season,” he told Undercurrent.
The main sizes from Thailand will be medium such as EZ peel 31-40, 41-50, and CPTO 41-50, 51-60, 61-70 and probably 71-90, said Viriyanantawani.
“Another key factor will be demand from US and Canada. If some buyers are trying to buy more aggressively covering their year-end holidays, then prices may bounce back. It’s is about balance between demand versus supply.”
Another Thai shrimp sector executive, not wishing to be quoted by name, said there is a need for Thai prices to be lower and compete with shrimp from other origins.
“If other countries like Indonesia and India are more competitive then demand to Thailand may not be strong enough to shake our market and prices may continue to fall,” the source told Undercurrent.
“All packers realize we have to be competitive enough to compete with other countries, such as India, Indonesia and Vietnam. If Thailand is still too high on price, then we will be quiet for the rest of the year,” he said.
“Therefore, Thai packers must be taking the heat off the market and hope to bring down the prices significantly preparing for the next coming up bids,” said the source.
It remains to be seen how much longer the lower prices last for, however, said another Thai shrimp executive, not wishing to be quoted by name. “I think prices dropping this time might be just temporary due to weak demand in the past few months. Now, it’s getting better and we see some price rebound,” he told Undercurrent.
Will production recover?
Thailand’s production has dived from around 650,000 metric tons at the peak to around 200,000-210,000t last year, due to the impact of early mortality syndrome (EMS).
Some in the sector, such as Thai Union, see an increase coming this year from the level seen in 2014. Others, such as the Thai Shrimp Association (TSA), are forecasting a similar level as 2014.
“We expect our production will slightly recovery 20% from last year. From 210,000t in 2014 to 240,000-250,000t in 2015,” Thai Union’s Boonmechote told Undercurrent.
The lower prices mean shrimp farmers, who are adapting to cope with the impact of EMS, are unlikely to up production much in 2015, Somsak Paneetatyasai, president of the TSA said, in a recent interview with Dow Jones, cited on Seafood News.
“It is expected that Thai shrimp output will total around 210,000t this year and Thailand may need at least three years before the shrimp production returns to normal,” Paneetatyasai reportedly said.