Thai shrimp prices rocket on buyer activity surge : December 9, 2015
Ross Davies – Undercurrent News
Thai raw material prices jumped up again last week, driven by aggressive buying patterns and less-than-expected quantities elsewhere.
Between Nov.30 and Dec.5, prices reached THB 175- 180/kilogram for 60 pieces/kg, head-on, compared to THB 160- 170/kg only a week earlier.
Similarly, prices rose from THB 155- 165/kg for 70 pcs/kg, head-on, and THB 145- 155/kg for 80 pcs/kg in the week of Nov.23-28, to THB 170- 175kg and THB 155- 165/kg respectively.
This marks the third successive week that prices have advanced.
According to Satasap Viriyanantawani — general manager for the Thai business of Siam Canadian Foods, an Asian frozen seafood supplier headquartered in Bangkok — the leap in raw materials prices can be attributed to a peak in buying activity among packers.
“Actually prices have been continuing to move up over the past two-to-three weeks and are still moving up, but during the past ten days prices went up significantly,” he told Undercurrent News. “That’s because several packers are buying more aggressively, trying to complete their orders and ship out before deadline.”
Siam Canadian Thailand “alone needs to have 125 new containers shipped from Thailand within December from two different packers only”, said Viriyanantawani.
“In addition to that, there are some pending shipments that have been delayed from November and buyers are screaming at us to get them shipped ASAP,” he added.
“Basically, it is a demand and supply relationship. Now demands from all packers are much stronger than supply availability. It should be just temporary, but it may drag through the end of December when the majority of current orders are completed.”
One significant US buyer, source A – who wished to remain anonymous – agreed that heightened demand from stateside buyers had impacted on raw material prices “somewhat”.
But he also said it was to do with supply dynamics – and lack thereof – in other Asian markets, particularly India.
“For instance, Vietnam has no production and what’s there China is buying,” said the source. “In Indonesia, raw materials shot up, too. As for India’s lack of supply, it’s a bit of a mystery, and I’m not sure how much disease has to do with it, or if it’s connected with the end-season. China is buying elsewhere because of India’s lack of supply.”
For more on India’s lack of supply, see below.
Thailand’s depleted currency has also almost certainly contributed to the status quo. Having fallen to a six-year low in the summer, the baht remains weak against the dollar, which has led to increased buyer activity.
“About two months ago, Thailand’s pricing became attractive again, especially for shrimp,” said source B, another US buyer, who requested anonymity. “The exchange rate was making it attractive to the packers. The exchange rate plays a large role in pricing.”
“Thailand prices from time to time are cheaper than other countries, especially during October through to mid-November,” added source A. “Buyers were placing orders in Thailand during that time.”
Another factor to be taken into consideration, said source B, is the Chinese New Year, which will fall on Feb.8.
“This is the last week for orders into China to arrive and be distributed before the Chinese New Year,” he said.
Asked whether this would prompt prices in Ecuador to firm up, source B said he expected prices there “to relax in the coming weeks – well, no upward pressure.”
Indian harvesting low
Prices for Indian farmed vannamei look set to continue rising through into 2016, as raw material availability becomes more and more scarce.
Shrimp farmers across India’s main production regions have been unwilling to stock their ponds at densities they have been, or to leave shrimp in the water to grow to the larger sizes, after weak prices earlier in 2015. As a result harvests now are growing quite short.
Adding to this are some concerns over disease and flooding. The former, while not killing shrimp outright, is limiting growth, while the latter has seen heavy rains south of Chennai in Andhra Pradesh wash away farms.
Shrimp crops in Ongloe and Nellore, in Andhra Pradesh, have been washed away by rains. Farmers plan to offset the shortage with new stocking shortly, but this will not be ready for harvest until February 2016.