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Asian shrimp production fell short of earlier forecast

10/04/2019

Despite lower overall production in Asia, export prices remained soft because of high inventories in the single largest market, the United States of America. Asian and Latin American exporters increased direct sales to China, following the country’s clampdown on illegal border trade with Viet Nam and implementation of lower tariff since December 2017.

Supply

The 2018 main farming season in Asia ended in October. Preliminary industry estimates indicate lower production in China, India, Thailand and Bangladesh compared with 2017, affected by decreasing market prices and occasional occurrence of shrimp diseases. Shrimp production increased in Indonesia and Viet Nam.

The sharp price drop in April 2018 and the lower export prices to the United States of America throughout 2018 factored in India’s lower annual production, which might have declined by 15–20 percent compared with 2017 (700 000 tonnes). To combat dipping market prices and disease occurrence in farms, Indian farmers produced less large sized shrimp and more medium and smaller sizes during the main season.

Reports on Viet Nam suggest a total production of about 500 000 tonnes, credited to the efficient farming system. Many farmers moved back to black tiger farming in 2018, due to price advantage compared with whiteleg shrimp (Penaeus vannamei). Viet Nam also imported 270 000 tonnes of frozen shrimp in 2018 for re-processing and reexports. Farmed shrimp production in Thailand remained substandard, possibly at 300 000 tonnes, which reflected on decreased exports in 2018.

In Latin America, the preliminary data for Ecuador indicate farmed shrimp harvests of more than 500 000 tonnes (+17 percent) in 2018. Production increased also in Mexico. Commercial landings of sea-caught shrimp in the Gulf of Mexico in the United States of America totalled 39 100 tonnes in the first nine months of 2018, which was only 1 percent lower than that of 2017, but 16 percent below the last 16 years average. 

Trade

There were marginal to negative growths recorded in the conventional developed markets, despite the lower shrimp prices. However, China’s strong presence in the shrimp import trade continued throughout the third quarter of 2018 with a significant rise in direct imports.

Exports

During the third quarter of 2018, India maintained its number one position in the global export trade. The ranking changed with Ecuador moving up to the second position, overtaking Viet Nam. China was Ecuador’s third largest shrimp market after Viet Nam and the EU28. The two-digit export growths in India, Ecuador and Indonesia could be attributed to the significant increases in direct exports to China. 

Meanwhile, Viet Nam’s official exports to China increased by 119 percent, while unofficial trade continued to decline following stringent border control by China. Vietnamese exports and re-exports to the EU28, Republic of Korea, Canada and Australia also increased during the review period. Exports from China also increased by 56 percent (86 100 tonnes), with more processed shrimp sales during the review period. The main markets were the United States of America and Japan. 

Imports

The strong presence of China in the international shrimp market continued during the first nine months of 2018, through direct imports and decreasing illegal border trade.

On the contrary, year-on-year imports in the large developed markets of the United States of America and the EU28 were marginally higher and they were negative in Japan. Vietnamese total shrimp imports for reprocessing and exports remained high and, for the first time, supplies declined from Ecuador (-7 percent to 119 200 tonnes) and Argentina (-34 percent to 3 000 tonnes) and slowed down from India (+3.7 percent to 118 000 tonnes).

United States of America

The domestic consumer market for shrimp remained good in the United States of America in 2018, with decent sales during the summer months. However import demand slowed down during the third quarter of 2018 amidst lower market prices, following high local inventories and subdued consumer demand in September and October.

US imports of shrimp in the first three quarters of 2018 reached nearly 500 000 tonnes, of which 380 000 tonnes consisted in raw frozen shrimp (shell-on and peeled) and 110 000 tonnes were processed shrimp including breaded products.

Import interests were very low in November and December of 2018, due to high domestic stocks enough to cater year-end demand (Thanksgiving, Christmas and New Year). Hence “there is no rush to import”, clarified some marketers in the United States of America. According to INFOFISH Trade News, farmed vannamei prices at US wholesale trade were at a three-year low at the end of 2018. 

Japan

The fifth largest import market for shrimp remained unresponsive to the general decline in shrimp prices in 2018. Demand for raw frozen shrimp, particularly shell-on products, continued to decrease. In the present market, only value-added shrimp are movable items, in retail and in the catering trade.

During the review period, there was a 10 percent year-on-year drop in imports of raw frozen shrimp, down to 98 000 tonnes, while processed shrimp imports increased by 1.1 percent to 44 700 tonnes. The leading suppliers were Viet Nam and Thailand, mostly supplying semi-processed and processed shrimp to Japan.

European Union (Member Organization)

Positive consumer demand led to a 4.7 percent rise (25 600 tonnes) in total EU28 imports during the first nine months of 2018. This could be attributed to an even higher percentage increase in extra-EU28 imports (+6.3 percent to 428 100 tonnes) supplied mainly by Ecuador, Viet Nam, India, Argentina and Greenland. Nearly 20 percent or 81 000 tonnes of extra-EU28 imports consisted of processed shrimp, for which Viet Nam was a major supplier (22 500 tonnes).

Asia/Pacific and other markets

Asian shrimp markets remained active throughout 2018, with China at the top of the pyramid. Imports for local consumption increased in the Republic of Korea (+7 percent to 55 525 tonnes), Hong Kong SAR (+1 percent to 35 000 tonnes), Taiwan Province of China (+12 percent to 32 100 tonnes) and Malaysia (+23 percent to 20 000 tonnes). High imports in Viet Nam persisted for reprocessing and re-exports.

In 2018, shrimp production in China fell below the 2017 level, domestic demand remained high with increased sales prospects during the Lunar New Year in February 2019. Supplies through unreported border trade have dropped due to strict border control by the Chinese authority.

During the international seafood expo held in Qingdao in November 2018, there were brisk business negotiations between Chinese importers and foreign suppliers. Imports were likely to be higher during December 2018 and January 2019 for the Lunar New Year high demand period. With declining prospects for domestic production and intensified border control with Viet Nam, imports increased by 116 percent during the first nine months of 2018 compared with the same period in 2017. There was a more than 100 percent rise in imports from Ecuador, Argentina, India, Canada and Thailand during this period.

The domestic market in India absorbed more farmed shrimp in 2018, as and when international sales slowed down. Reportedly, farmers in Andhra, where 65 percent of vannamei shrimp are produced, sold 20–25 percent of their produces (sizes: 100 pieces per kg) in the domestic market, with a retail price of USD 3.00–4.00 per kg.

Price

Prices of farmed vannamei shrimp remained soft in the international trade until August 2018 and firmed in September 2018 by 3–4 percent for the US market. The US market was unresponsive to this offer. In the 2018 price drop, black tiger shrimp was less affected than vannamei shrimp due to short supply.

For wild caught shrimp, the ex-vessel prices of Northern and Western Gulf of Mexico in the United States of America for Un/15 counts headless shrimp increased to USD 9.42 per lb and USD 9.38 per lb, respectively in September 2018, compared to USD 7.78 per lb and USD 8.70 per lb a year ago.

As of December 2018, Argentine red shrimp prices were stable due to tight supply during the year-end. However, some small price declines for large sizes occurred in January 2019 due to higher catches in the on-land processing industry.

Outlook

In Asia, supplies of farmed shrimp will be seasonally low until February 2019. The new 2019 season’s harvest in the southern producing region (Andhra) will start in March, and in April for the Eastern states. Some farmers in Nellor (Andhra) and Odisha are likely to shift to black tiger shrimp and to freshwater prawn farming in the upcoming aquaculture season.

In view of the Lunar New Year, on 5–6 February 2019, shrimp consumption in East Asian markets (China, Hong Kong SAR, Taiwan Province of China, Malaysia, Singapore and Viet Nam) was high. Prices are already moving up for all types of shrimp, particularly large sizes. After the Lunar New Year celebration, the high import trend in these countries is likely to cool down.

Farmers in Ecuador and other countries in Latin America will enter the low aquaculture season in late February.

In the international shrimp trade, positive movement in the US market is still absent. In view of the partial government shutdown, the normal good consumption during Lent remains questionable. The domestic cold storage situation will possibly be clear by early March, when both suppliers and buyers will have the opportunity to discuss the market situation at the International Seafood show in Boston, Massachusetts.

In Europe, domestic and import demand will be slow until the end of the winter season. The shrimp market is also very sensitive to economic developments. The widespread uncertainty in Europe may impact shrimp demand in 2019. 

Starting on 1 January 2019, wild caught shrimp exports from India will also be subject to the US Seafood Import Monitoring Program (SIMP) that requires traceability on imported seafood from point of capture to the point of first sale. All fishing nets and vessels are required to possess Turtle Excluding Devices (TED) in a move towards turtle conservation and prevention of imports of illegal, unreported and unregulated (IUU) fishing products. In Japan, the Spring festival in April/May will be the main high consumption season for shrimp, when demand will move to value-added products.

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