GLOBEFISH - Information and Analysis on World Fish Trade

Shrimp - September 2014

01/09/2014

Since early July, shrimp prices have strengthened due to renewed interest from western markets. Import demand from Japan remains slow.

During the first quarter of 2014, farmed shrimp production worldwide remained below the expected level. Nonetheless, imports increased into the US and EU markets. With overall production low, prices have been pushed up in the current market. Meanwhile, east Asia continues to strengthen supplies through imports from South Asia and Latin America.

Supply

Asia

In China, production has not improved much compared to last year, although some farmers in the southern provinces have moved to new areas with the expectation of better harvests.

In Thailand, production has thus far remained below last year’s. Though the EMS disease has seemed to stopped spreading, unfavourable weather conditions affected shrimp farming during the first two months of the year with extremely cold weather and again in April and May with the delayed monsoon and hot weather. Many processing plants have been forced to stop operations because of the raw material shortage. Given these challenges, the previous 2014 forecast of 400 000 tonnes of shrimp production is unlikely.

In India, overall supplies have also been lower than earlier forecasted with the delayed monsoon this year another cause of concern. As a result of falling demand in the US market and subsequent price weakening, many farmers opted to harvest early in April. However, there have been renewed import inquiries from US and EU buyers and farmers have begun holding stocks in their ponds from mid-June onwards. Unlike last year, there may not be a large increase in production in the existing vannamei farming area in southern India. However, there will be additional supplies from the southeastern states of Odisha and West Bengals where farmers have adopted vannamei aquaculture and moved away from the traditional black tiger farming. Overall in 2013, black tiger shrimp production in India declined by 40% due to farmers moving into vannamei production.

In Viet Nam, the antibiotic residue alert in the Japanese and EU markets, and falling shrimp prices prompted early harvests during the first quarter of 2014. This sudden surge in supply of smaller sized shrimp pushed down raw material prices by 35–37%. Reportedly, some farmers in Soc Trang province are going back to black tiger aquaculture, for which supplies are low and prices are stable compared to vannamei shrimp in the current market. Meanwhile, vannamei production has increased in the new farming areas, while the EMS problem remains a major concern in the areas affected by the disease. During the first quarter of the year, imports of raw shrimp material from Ecuador into Viet Nam for export processing were higher than compared with the same time period last year.

Latin America

In Ecuador and Honduras, farmed shrimp production seems to be going smoothly, reflected by increased exports to the US, Europe and Asian markets. In 2013, Honduras was the leading producer of shrimp in Central America (30 000 tonnes), followed by Nicaragua (24 500 tonnes) and Guatemala (17 000 tonnes).

Capture fisheries

US Gulf shrimp landings were 5.44% lower during the first quarter of 2014 at 3 400 tonnes against the same period last year. Although the import price started to weaken beginning in mid-March, the ex-vessel prices remained firm at higher ranges compared with last year’s. In Argentina, the catch season ofPleoticus muelleri shrimp in national waters opened in late May and all freezing fleets report good landings; price is under pressure from Europe.

Market trends

As of July, the shrimp market has strengthened with increased prices at the ex-farm level and in international trade. Buyers from the USA and Europe have renewed interests with imports increasing in these western markets. Meanwhile, import interest is also strong from the Southeast for export processing. Australia has increased its domestic consumption.

For exports, as of March 2014, Ecuador appears to be the leading exporter of shrimp with a 32% rise in the volume. Indian exports have also increased by 49% and Indonesia by 20% compared with the same time period last year. An official source in Viet Nam also confirmed increased exports during the first quarter of 2014, for a total of USD 1.65 billion. On the other hand, exports from Thailand declined by 47% and from China by 22% during this period. In Latin America, Mexico also imported 54% more shrimp during the first quarter, mostly from Latin America and also from China, while its exports decreasing by 37% compared with the same time period last year.

Japan

The Japanese market has been characterized by falling demand for farmed shrimp as a result of supply limitations, price increases from the preferred sources in Southeast Asia and the weak yen. Indeed, for the first time in 25 years, monthly imports of raw shrimp this past March were less than 10 000 tonnes, nearly 23% below last year’s imports. Increased supplies from Viet Nam and China did not offset export shortfalls from Indonesia (-39%), India (-42%) and Thailand (-69%). It is noteworthy that despite the rise in production in Indonesia, imports dropped from this source.

Cumulative imports of raw frozen shrimp into Japan during the first quarter of 2014 were 5.26% below last year’s. Supplies increased from Viet Nam, which were mostly semi-processed (nobashi) and also from China (peeled shrimp). Supplies of cold water shrimp increased from Argentina and Canada during this period.

Processed shrimp imports into Japan were also significantly lower in the first quarter (-20%), due to raw material shortages and the high price in Thailand, the main supplying country. Despite this trend, Thailand remained the leading supplier of value added shrimp in Japan while Viet Nam increased its own supply using imported raw material from Ecuador and India.

From January to May 2014, cumulative imports fell 20% below last year’s, indicating a falling demand pattern for tropical shrimp in the Japanese market. On the other hand, imports of the cheaper cold water shrimp increased from Argentina, The Russian Federation, Canada and Greenland as a result of favourable demand from supermarkets and sushi restaurants. With the weak yen unable to support import prices of tropical shrimp, the market continues to replace supplies with the cheaper cold water variety.

In domestic wholesale trading, price of shell-on vannamei bottomed out starting in May and then began rising, while local inventories are lower than last year as monthly imports declined beginning in March. Due to the antibiotic residue issue in Vietnamese shrimp, imports of shell-on vannamei from India were expected to increase. However, that scenario is not occurring due to the low market demand and weak yen.

USA

During the first quarter of the year, shrimp prices were 15.5% higher in the US retail trade, making shrimp the top contributor to sales in the fresh seafood market segment. However, according to Nielsen, there was a 4% decline in household shrimp purchases during this period. Imports increased in April from Southeast Asia and Latin America. Domestic landings remain below last year’s.

In general, though domestic consumption of seafood in the USA was strong during the Lent period in March/April, it did not necessarily boost shrimp consumption. Many in the catering trade they avoided shrimp due to the high prices, using finfish instead. The closure of six Red Lobster restaurants along the West Coast by Darden Restaurant Inc also had a negative impact on shrimp sales.

Nonetheless, shrimp supplies to the USA are increasing with imports substantially higher during the first quarter at 127 100 tonnes, a 14.2% increase compared with the same period last year. Indonesia was the main supplier followed by Ecuador, India and Viet Nam. Supplies of semi-processed raw peeled shrimp and cooked shrimp from Indonesia and Viet Nam were significantly higher compared with last year. There were large supplies of breaded shrimp from China and imports also increased from Thailand. Ecuador exported more shell-on and peeled shrimp to the US market.
 
EU

Despite price reductions during the March-June period, demand for shrimp in the EU market has not improved much this year. Overall imports increased only marginally by about 4% as imports increased into Italy (+3%), Denmark (+7.6%), the Netherland (+20%) and Belgium (5%). Lower imports were reported for the first quarter of 2014 into the large markets of Spain (-10%), France (-0.9%), the UK (-9%), and Germany (-14%), compared with the same time period in 2013.

Interestingly, there has been a surge in supply from Ecuador, the top non-EU source, by 33% during this period. Overtaking Greenland, India positioned itself as the second largest exporter with a 20% increase in supply. Imports also increased from Denmark, Viet Nam, Canada, Belgium and Spain.

In the Spanish market, there was a substantial rise in imports from Ecuador, but supplies declined from other sources.

This trend is similar in the French market, where exports of vannamei increased (from Ecuador, India and Viet Nam) but declined for black tiger shrimp from Madagascar and Bangladesh as the latter is perceived to be too expensive by the market.

In Italy, there was a marginal recovery in imports with supplies dominated by Ecuador.

In order to feed the reprocessing industry, imports increased into Denmark.

In the UK, total shrimp imports during the first quarter of 2014 were 9% lower than the first quarter of 2013, although supplies increased from India, Viet Nam and Indonesia, mostly for shell-on and peeled vannamei. Imports of processed shrimp suffered due to reduced exports from Thailand (-57.5%) due mostly to an increased tariff on value–added products from this source. The price sensitive market also bought less black tiger shrimp, which affected exports from Bangladesh.

Belgium, the leading distribution hub in the EU, procured more vannamei shrimp from Ecuador and India during the first quarter of 2014, resulting in a 5% increase in overall shrimp imports compared with last year. Belgium also re-exported increased supplies to France, the Netherlands, Germany, and the UK during this period.

In Germany, lower imports during the first quarter confirmed a weaker market trend.

Asia/Pacific

In east Asian markets, the retail price of fresh shrimp increased considerably during 2013 and stayed almost at that level in 2014, in turn affecting overall demand. Imports saw year on year decreases during the first quarter between 8–22 %, including in China, the Republic of Korea, Taiwan Province of China, Singapore, Hong Kong and Malaysia. This trend is clearly a result of lower production of farmed shrimp in Asia during this period. However, imports for reprocessing increased in Viet Nam and Thailand, particularly from Ecuador and also from India. As a single market, Viet Nam was the leading market for frozen shrimp from Ecuador during the first quarter of 2014, with Ecuador increasing their exports to this market by 104% to reach nearly 13 000 tonnes. Ecuadorian exports also increased to China (+96%) and took place for the first time to Thailand.

China has recently tightened its borders to fight illegal trade, impacting shrimp imports. Reportedly, some Indian and Ecuadorean shrimp imported into Viet Nam were re-packed and exported to China, though this has slowed considerably this year. However, direct exports from Ecuador to China increased by 36% during the first quarter of 2014 against the same period last year. Imports of cold water shrimp also increased from Canada and Argentina during this period.

On a positive note, Australian imports of shrimp increased by 24% to 8 500 tonnes during the first quarter of 2014 compared with the same period last year.

Outlook

On the supply side, moderate to good harvests are reported from India, Indonesia and Viet Nam. In Thailand, this year’s annual harvest is unlikely to be higher than last years, which totaled 250 000 tonnes.

In terms of prices, since July, shrimp prices have increased in international trade as a result of renewed interest from US and European buyers and the conservative supply forecasted for the rest of the year. Domestic traders in these markets are cautious although summer demand seems to be improved this year in the USA. In Japan, the weak yen is unlikely to boost imports in the near future.

In Asia, imports into China are likely to increase for domestic consumption, while Viet Nam and Thailand will continue to import for export processing.

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