Siam Canadian: US currently ‘only game in town’ in shrimp : March 17, 2015
Tom Seaman – UNDERCURRENT NEWS
BOSTON, United States — The US is looking like being the dominant shrimp buying force in 2015, at least for now, with weak currencies and a slower development of the Chinese economy, sources at the Boston seafood show said.
“Prices are soft, there is limited interest,” said Jim Gulkin, managing director of Siam Canadian Group, a Bangkok-based frozen shrimp supplier, which is sourcing shrimp and frozen seafood from all over Asia.
“The US is the only game in town with the dollar the way it is and weak currencies elsewhere, Europe, Australia, Canada, and a slowing economy in China and less consumption there,” Gulkin told Undercurrent News.
US buyers are just sitting back, said an executive with a foodservice chain. “It’s a different picture to Boston last year, when it was still a sellers’ market. It looks like production will be better from Thailand, Indonesia, India and Ecuador is coming off the back of a record year.”
After a few years of supply being decimated by early mortality syndrome in Thailand, Vietnam, China, Malaysia and Ecuador, volumes are expected to recover somewhat in 2015.
Last year, Ecuador, which is seeing its sales to China boom, produced over 300,000 metric tons. Prices for Ecuadorian packers had dropped at the start of the year, before a pickup before Chinese New Year.
An Ecuadorian seller, however, was typically bullish.
“That’s an Urner Barry vision of market,” he told Undercurrent, of the view the US will be the dominant force this year.
“We have so many orders to China for hoso [head-on, shell-on] and to Vietnam for hlso [headless, shell-on]. So I don’t [care] what US buyers think.”
This source said Vietnam is buying for sale on to China, as well as for re-processing. Prices for hoso are up and hlso are stable, with prices for 31-51 count up, he said.
Whereas US buyers are generally talking up supply this year, Ecuadorian packers are still talking it down. “The real fact is that I’m very sure supply will be short this year,” the source said.
Gulkin does not agree. He sees Thailand recovering to over 250,000t, from 200,000t last year. Thailand could even go as high as 300,000t, he said. He also sees India producing strong volumes, following on from a big 2014, and Indonesia also upping production.
“As things are to date, there will be good production everywhere and not enough demand to pull that in,” he said.
This could, to some extent, offset the exchange rate losses in Europe, said Gulkin.
For buyers in Europe, the dollar/euro exchange rate means buying is tough. Now, there is €1.04 to the dollar, compared to around €1.36 at the start of 2014 (see below).
“European sales weren’t that great last year, consumption was down last year, because of the economy and higher prices. This won’t help,” said Gulkin.
But, if prices move down, this will compensate for this and held stimulate some demand in Europe, he said.
Although he feels the US seems to be in the box seat at the moment, Gulkin said China will still be a big buying force.
“China is still going to be a big player and, although the economy is slowing down, shrimp consumption will move from larger, more expensive premium shrimp to cheaper stuff. It is now not a luxury item; it is a traditional part of their diet, he said.
For the US, the extent to which demand grows depends on how retail and foodservice sellers behave, he said.
“In the US there will be cheaper shrimp and it is up to the retailers as to whether they will pass onto consumers. If they do, there will be a big increase in volume. If they decide to make more money, there won’t,” he told Undercurrent.
“In past years when shrimp was very cheap, retailers have done big promotions to get people in the store. Sometimes, they just say the price has dropped from $7 to $5, but we will keep that $2 for ourselves,” he said.
Although he feels the exchange rate situation puts US buyers in a strong position, Gulkin said China big buying force in 2015, backing up the picture from the Ecuadorian packer.
“China is still going to be a big player and, although the economy is slowing down, shrimp consumption will move from larger, more expensive premium shrimp to cheaper stuff. It is now not a luxury item; it is a traditional part of their diet,” he said.