GLOBEFISH - Information and Analysis on World Fish Trade

Shrimp - June 2014

01/06/2014

After staying firm for more than a year, shrimp prices in international trade began to weaken in late March.

Annual import growth in the major markets was negative in 2013, following the production shortfall of farmed shrimp and high market prices. Supplies during the first quarter of the year were seasonally low. Forecasts predict improved supplies with the new season’s crop available starting in May/June. However, as the main market, the USA is holding more than adequate stocks amidst low consumer demand, driving prices down. Import demand in Japan and in the EU are also weak.

Supply

Last year, farmed shrimp production in Asia and Latin America suffered significantly from EMS disease. Following this, supplies during the first quarter of 2014 remained low before the new season is expected to start in April/May. However, unlike last year, demand from global markets is slow, making farmers less enthusiastic about pond seeding.

In Thailand, news from the industry highlighted that this year’s farmed shrimp production may increase to 400 000 tonnes, considerably more than the earlier forecast of 300 000 tonnes. Despite these predictions, harvests during the first half of 2013 have so far been slow. Falling ex-farm prices during January and February and the longer cold season resulted in delayed pond seeding. Given these factors, the next peak production in Thailand may start in August. The price weakening in the USA is surely a negative development for shrimp farmers in Thailand as well as elsewhere.

The supply shortfall in 2013 continues to take a toll on export processors of raw frozen shrimp in Thailand. During the first quarter of 2014, three large companies, The PTN Group, Narong Seafoods and Charoen Pokphand (CP) Foods, closed down their processing plants citing raw material shortages as the cause. Following this, the vertically integrated CP Foods laid off 1 200 workers in a move to focus on value added products. However, the company has set up a new processing facility in Viet Nam, which has been operational since February. Such a move by one of the large processors in Thailand clearly indicates the industry’s aim to move away from exports of raw frozen shrimp.

In India, farmers in Andhra state have begun concentrating fully on vannamei production with this development gaining momentum in Tamil Nadu, Odisha West Bengal and Gujerat. Based on these developments, vannamei harvest in 2014 is forecasted to be higher than last year, with the season’s harvest beginning in April or May. However, so far, farmers seem to be holding stocks in ponds due to lack of demand and price weakening in the US market. The revised maximum residue level of ethoxyquin for farmed shrimp (at 0.2 ppm) is expected to direct more supplies to the Japanese market.

Viet Nam indicated increased production in 2013 compared with 2012. Moreover, they reported 100 000 tonnes of imports, mainly vannamei shrimp, which is reflected in exports from Ecuador, India and others. So far in 2014, vannamei production has improved harvests but supplies still have not been enough to meet export demand and thus imports of raw material continue.

In China, the estimated production of farmed shrimp in 2013 was 1.1 million tonnes, nearly 22% less (-300 000 tonnes) than in 2012. Some reports indicate almost a 30% production shortfall for vannamei shrimp. However, this year many farmers have moved away from the main farming area of Zhejiang in Guangdong to the coastal areas of Guangxi, near the China/Viet Nam border, due to better farming results there last year. Some farmers who have stayed in Eastern Guangdong have increased their pond stocking density by 40% and have delayed stocking their ponds. Overall, shrimp supplies in the country are short and Chinese prices weakened slightly after the Lunar New Year.

Latin America

In 2013, the EMS disease in Mexico caused high mortality to 520 shrimp farms in Sinaloa covering an area of 35 000 hectares. The result was huge economic losses, estimated at USD 75 million, and a sharp drop in production volumes. Indeed, production estimates for 2013 are 35 000–55 000 tonnes compared with 100 000 tonnes in 2012. For 2014, farmers in Sinaloa, Sonora and Baja California, have not yet stocked their ponds and only 50–60% of farms are expected to pond seed as EMS issues persist.  With these developments, production for 2014 is likely to stay at the 2013 level.

Meanwhile, the strong domestic demand for shrimp in Mexico and strong price (USD 5.90 per lb for 41/50 counts) has lead to less shrimp available for exports. Supplies from Belize, and Guatemala are also being imported, largely due to the strong Lent demand in the current domestic market. 

The shrimp aquaculture sector in Ecuador, Nicaragua, Honduras and Peru performed better in 2013, which was reflected in their exports. Ecuador exported USD 1.8 billion of shrimp in 2013, compared with USD 1.28 billion in 2012. Exports from Nicaragua also grew, from USD 47.7 million in 2012 to USD 64.6 in 2013. Honduras showed strong export growth as well, from 17 200 tonnes in 2011 to 26 000 tonnes in 2013. Peru continued this positive trend, with export volumes growing 11.4% in 2013 compared with 2012.

Landings from capture fisheries

US domestic shrimp landings were 2.3% lower in 2013 compared with 2012 at 52 269 tonnes. Following the global trend, ex-vessel prices for all shrimp remained high.

Market trends

Lack of demand from US buyers caused a 12% drop in shrimp prices at the end of the recent seafood expo in Boston 

A large group of shrimp producers from Indonesia, India and Ecuador were at the seafood expo in Boston in March this year, with substantial products to offer.  However, there was a major lack of demand from US buyers leading to serious concern among sellers, who expected good deals during the event. The Indian offer price for 16/20 counts headless vannamei dropped from USD 7.40 per lb to 6.50 per lb and even at this price, there was hardly any interest from US buyers. Demand for Asian peeled shrimp was also weak due to large imports from Ecuador. Currently the market is holding relatively good stocks bought on high prices. Forward buying from Ecuador has also been substantial during the recent months.

Demand from Japan and the EU also did not pick up during the first quarter of 2014. However, Viet Nam’s demand continues for export processing. Imports from China have slowed since the Lunar New Year celebration.

Japan 

Import price for shrimp in Japan increased by 30% in 2013 compared with 2012

Completely dependent on imported supplies, Japan continues to struggle with the declining yen value and high import prices.  Compared with the same time last year, the unit price of shrimp was 48% higher during the first quarter 2014, slashing household consumption by 38%. In 2013, imports of raw shrimp saw a 7% decline and in Tokyo’s Tsukiji fish market, shrimp demand decreased by at least 20–30% compared with 2012. Poor supplies of shell-on shrimp from Thailand, which led to high prices, have also affected demand in supermarkets. Traders are comfortable dealing with imported processed shrimp, which enjoys better demand.

For the first time in many years, Japanese imports of almost all types of shrimp in 2013 were at record lows. Overall, the market imported about 20 000 tonnes less than 2012. Both raw and processed shrimp imports were 6.5% below the previous years.  However, the cheaper sea-bob shrimp from Argentina was an outlier to this trend, registering a 300% rise in imports. Due to high prices, demand for tempura shrimp declined at kaiten-sushi restaurants.

During January/February, Viet Nam increased its exports of vannamei based nobashi shrimp (PTO) to Japan, with a large share of these volumes processed using Indian farmed vannamei. Interestingly, the price sensitive Japanese market seemed to be accepting double frozen products from Viet Nam. However, since February, Vietnamese shrimp imports to Japan are subject to full inspection for antibiotic (Oxytetracycline) residue. This mandate came in the context of recent leniencies, as Japan dropped Trifluralin inspection on Vietnamese shrimp in May 2013 and later raised the permissible level of Ethoxyquin from 0.01ppm to 0.2ppm. Japanese imports of raw frozen shrimp from Thailand in January/February were almost 42% below last year’s - a trend likely to persist for the rest of the year.

USA

India surpassed Thailand as the main shrimp supplier in the US market in 2013

Lack of demand from US importers at the seafood expo in Boston affected the global shrimp market, while more supplies are now available from Indonesia, Ecuador and India, with the latter offering large sizes that are considered relatively expensive in the current market. With these trends, it is apparent that Thai shrimp no longer dictate market trends. The US market is holding more than adequate expensive inventories. Persistent high prices of shrimp affected the restaurant and catering trade seriously during the last year.

The well known large restaurant operator, Darden/Red Lobster, reported falling profit margins in 2013 due to a USD 30 million rise in the cost of shrimp in 2013. The blame was placed on production challenges in Asia.

The first quarter 2014 shrimp market suffered from the extreme cold weather in the USA, which curbed shrimp demand both in the retail and restaurant trade. Additionally, supplies in the USA began at about 5% below last years’ level, which means that wholesale prices remain quite high and steady.

The USA imported about 26 400 tonnes less shrimp in 2013 compared with 2012, a 5% decrease. Registering a 43% increase in 2013, Indian supplies dominate imports, while EMS issues pushed Thailand to second place. Imports also increased from Indonesia and Viet Nam but declined from the two big suppliers in Latin America - Ecuador and Mexico. The former diverted more exports to East Asian markets (Viet Nam and China) while the Mexican supply shortfall was caused by the EMS disease.  

Imports into the USA during January/February increased by 8.6% against the same period last year with higher percentage imports from Indonesia, Viet Nam and Ecuador. Supplies mainly consisted of the cheaper medium and smaller sized shrimp from Ecuador and semi-processed and processed products from Indonesia and Viet Nam.

Europe

Short supplies and high prices dampen demand for shrimp

Despite the softening of prices globally, the European shrimp market remains quiet with buyers still cautious to sign new contracts. Product movement continues to be slow as consumer demand, particularly in the retail trade, has been sluggish.  Retail sales were affected by the high shrimp prices and wholesalers were hit particularly hard. 

Shrimp imports into the EU in 2013 declined by 3.8%; supplies from non-EU (external trade) sources were 4% lower compared with 2012. Shipments from Ecuador and Thailand suffered sharp drops by 10.1% and 41.5% respectively which could not be compensated by increasing supplies from India (+9.6%) and Argentina (+8.7%).

Supported by a rising production of farmed vannamei, Indian exports increased significantly to major community markets, including 21% to the UK and Belgium and 6% to France. India emerged as the second largest supplier to the EU market behind Ecuador, taking over Greenland’s position.

Ecuador remained the lead supplier of shrimp in the EU but supplies sharply dropped to its main markets in Spain and Italy by 14%. Among the EU major markets, only France imported more shrimp from Ecuador (+9%) as the latter diverted more of its exports to Asia particularly to Viet Nam and China. On the other hand, as consumers opted for cheaper alternatives, Argentinean shrimp made good progress in the Spanish and Italian markets.

To compensate for lower supply from Thailand, the UK imported more shrimp from India as well as from Canada. Denmark and the UK were the two main European markets for Canadian coldwater shrimp, where exports increased by 2.6% and 11% respectively in 2013.

Under the EU-Canada trade agreement, the Canadian shrimp industry expects to increase its exports into the EU in the future. However, the recent decision by the Department of Fisheries and Oceans of Canada to cut the TAC for northern shrimp to 115 891 tonnes for 2014, down 13% from the 2013 quota, will be a challenge to this goal and has received strong criticism from industry players.

Asia

Viet Nam, Republic of Korea and China were the main markets for imported shrimp 

In 2013, China imported shrimp aggressively, not only from Asian sources but also from Latin America, Europe and Canada. Overall imports of frozen shrimp in 2013 were 30.3% higher than 2012; supplies increased by 84% from India, 48% from Canada, 32% from Greenland and 16% from Ecuador.

In 2013, Viet Nam imported nearly 100 000 tonnes of shrimp for reprocessing. Imports from Ecuador doubled from 17 579 tonnes in 2012 to 37 753 tonnes. Similarly, Indian exports to Viet Nam increased by 106% to nearly 30 000 tonnes last year. For both India and Ecuador, Viet Nam was the most important shrimp market in Asia last year.

The rapid growth in production of vannamei shrimp boosted exports in India. Indeed, during the 2013–2014 fiscal year, vannamei shrimp exports increased to 134 372 tonnes (USD 1.47 billion) compared with 69 565 tonnes (USD 540.8 million) during the previous fiscal year.

Meanwhile, Russia has opened up its market again for shrimp from Bangladesh after Russian inspection authority Rosselkhoznadzor lifted the ban on three shrimp exporters in February and March this year. Before the ban, the country used to export around 7% of the total shrimp to the Russian market, worth Tk 3.0 to 3.5 billion (USD 39-45 million) annually.

After the Chinese New Year Festival in January/February, consumer demand for shrimp in East Asia remains calm. However, as of April, retail price of fresh head-on remains 30–38% higher compared with the same month last year.

Outlook

Supply forecast for farmed shrimp indicates delayed harvests in Viet Nam and Thailand. However, production is expected to be better than last year. Supplies in India, Indonesia and Ecuador are predicted to be good for 2014.  

In the US shrimp market, there is pressure, with high priced inventories and heavy imports during the first two months of the year. Importers’ offer prices have weakened significantly, which is not good news for shrimp farmers, particularly in Southeast Asia. The falling market prices may discourage their present enthusiasm as many lost profits last year to EMS disease.

In Japan, the seasonal demand for shrimp is expected to increase during the April/May Spring Festival season. Since the ethoxyquin issue has been resolved for Indian farmed shrimp imports, price drops in the US market is good news for Japanese importers. For processed products, Japan relies heavily on Thailand, Viet Nam, Indonesia and China.

More shrimp will be imported into Mexico from Latin America. Additionally, increased imports can be expected from India to Viet Nam and Thailand where it will be reprocessed and exported to China for local consumption.

European traders predicted a difficult market for the first half of 2014 as retailers reduced promotions due to high prices. However, the positive supply forecast and possible softening of shrimp prices may improve demand during the second half of the year.

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