Thai supplier: Shrimp prices to strengthen further on supply squeeze : February 1, 2016
Ross Davies : Undercurrent News
Thai raw material prices continue to firm on the back of a supply squeeze.
Between Jan. 18 and Jan. 23, prices reached THB 190-200/kilogram for 60 pieces/kg, head-on, compared to THB 185-190/kg only a week earlier.
Prices shot up even more for 70 pcs/kg, head-on, going from THB 160-175/kg in the week of Jan. 11-16, to THB 180-190/kg.
Meanwhile, prices for 80 pcs/kg touched THB 160-180/kg for the week.
Prices have been rising steadily since mid-December. At first, this was due to a peak in buying activity among packers looking to complete orders before deadline day, as reported by Undercurrent News.
Speaking at the time, Satasap Viriyanantawani — general manager for the Thai business of Siam Canadian Group, an Asian frozen seafood supplier headquartered in Bangkok – said the price surge was contingent on “the demand and supply relationship”.
“Demands from all packers are much stronger than supply availability,” he said. “It should be just temporary, but it may drag through the end of December when the majority of current orders are completed.”
It is a marked contrast to the prices of October and November 2015, when prices for 60 pcs/kg were as low as THB 145-150/kg, and THB 120-125/kg for 80pc/kg (as of Oct. 26- 31).
According to Viriyanantawani, when prices were low, “some shrimp farmers did not stock new fry at that time, or only stocked and utilized a minimum”. This lack of contingency planning, he said, has contributed to suppliers’ present woes.
“We are now suffering the consequences from that period,” he said. “It is low season here. It is expected that supply will be short during January and February, and we may not see any sign of improvement in March.”
Still struggling to meet demand, some Thai suppliers have a backlog of orders — dating back to before Christmas — that still need to be fulfilled.
“Prices are rising because several packers are still having backlogged pending orders that they need to honor,” said Viriyanantawani. “So some January shipments will be pushed back to February.”
“Demands from those packers to fulfill their need for pending orders will remain very strong until at least March. We will probably need to wait until April until we can start to see a sign of improvement on supply.”
And it’s not just Thailand that can expect low growth supply, added Viriyanantawani, who predicted overall Asian shrimp supply to contract in 2016, due to additional climate issues and disease.
“India is expected to be down; Indonesia is no better,” he said. “If that happens, and there is a shortfall, overall supply will not be enough, and thus prices may stay high and firm.”
It’s all a far cry from the sentiment of last October’s GOAL conference in Vancouver, Canada, at which shrimp production was predicted to grow by 7.7% across this year.
But Viriyanantawani’s bearishness chimed with forecast of the shrimp panel at last week’s Global Seafood Market Conference, Miami, Florida, which stood at 4.5 million metric tons’ production for 2016 – approximately the same level for 2015.
The same group – which included executives from Charoen Pokphand Foods, Rich Products, Aquastar and Omarsa – said India, in particular, could expect a rough ride in the coming months.
In India, prices for farmed vannamei have been on the ascent since September, with access to raw materials becoming scarcer and scarcer.
Shrimp farmers across India’s main production regions have been reported to be unwilling to stock their ponds at previous density levels – or to leave shrimp in the water to grow to the larger sizes – creating low harvests.
Consternation stills run deep on the subcontinent over disease. While not killing shrimp outright, outbreaks of enterocytozoon hepatopenaei (EHP) are certainly hindering growth – which the Miami panel predicted to drop to around 380,000t this year, from over 430,000t the year before.
EHP is all over Asia, one panelist said.
Adding to this are some concerns flooding, with heavy rains south of Chennai in Andhra Pradesh washing away farms last year.
Shrimp crops in Ongloe and Nellore – also in Andhra Pradesh — were also destroyed by rains. Farmers plan to offset the shortage with new stocking shortly, but this will not be ready for harvest until April 2016.
Indonesian shrimp production is also expected to drop down – to 220,000t – in 2016, while Chinese output will be flat on 2015 at 600,00t, added the said panel.
It would seem that production estimates from national governments don’t always tally with reality. Beijing still predicts production levels of approximately 1.3m metric tons for the year – an unlikely figure.
Vietnamese exports are expected to be far higher, due to the amount of shrimp it exports — as the panel bluntly put it, Vietnam overstates its shrimp production. Domestic production is, in fact, expected to contract to around 260,00t in 2016.
The production squeeze extends beyond Asia, too. According to slides shown in Miami, output in Ecuador this year will also be flat – at 330,000t – with early mortality syndrome still posing a prevalent threat.