Will return of Thai shrimp supply see resurgence of long-term program buying? : May 21, 2015
Tom Seaman – UNDERCURRENTNEWS
When early mortality syndrome decimated Thai shrimp output, North American retail and foodservice giants had to switch approach.
Instead of buying on six to 12 month contracts, they dropped to three months, at the most.
This was partly in reaction to the price rise caused by the supply shortage from EMS. Now, the prices have dived and are a fraction of the peak.
“Thailand is the producer of choice for the long-term programs,” said Jim Gulkin, managing director of Siam Canadian Group.
When Thailand’s volumes dived, the big North American buyers where not able to get the same long-term commitment elsewhere as easily, he said.
Some large Indonesian and Vietnamese packers do long-term programs, but not most, he told Undercurrent News.
Indonesian packers got caught on long-term contracts locked in before the prices rocketed up, so are still very “gun shy” on this way of working he, said.
India, where production has rocketed up in 2014, is not known for selling on a long-term basis. So, even with the big reduction in output, most big North American buyers kept in with Thailand, said Gulkin, hoping production would recover.
Now, this seems to be happening, meaning a return to more long-term buying could be on the cards.
With Thai production starting positively in 2015, levels of between 250,000 metric tons and 270,000t are being talked about for 2015.
Although this is an improvement, Thailand needs around “400,000t to be competitive on price in the global market”, said Gulkin.
The North America buying season starts around now, running through July.
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