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Farmed shrimp supply stayed low in Asia

10/09/2019

Shrimp imports contracted in the United States of America and the EU28 during the first quarter of 2019. Strong direct imports in China and good seasonal demand in Southeast Asia kept the shrimp aquaculture and export industries from another price crash during the first half of 2019. Asian shrimp farmers have reduced stocking density in their farms for the rest of the year, which may result in a production drop for 2019 below the 2018 level.

Supply

During the season’s first harvest in April–June, vannamei production declined considerably in Asia as low price persisted in the international market. Farmers have reduced pond density, delayed seeding and even delayed harvests.

In India, pond seeding in Andhra during the first half of 2019 was 30–50 percent less than in the same period in 2018, resulting in lower harvests. Nearly 20–30 percent drop in production was reported in Tamil Nadu, Gujarat, Odissa and West Bengal. The extreme hot weather and ‘no rain’ during April–June also affected shrimp aquaculture in India.

Lower sales of seed and shrimp feed were also reported in China, Viet Nam, Indonesia, Thailand and Malaysia, indicating a smaller than projected production during the first half of 2019. The shrimp farming season in Latin America ended in February/March 2019 and the new season began in June/July. The largest producer in that region, Ecuador, harvested over 500 000 tonnes of shrimp during the last season.

For sea-caught shrimp, the US National Marine Fisheries Service reported lower shrimp landings from the US Gulf of Mexico during the first quarter of 2019, at 7 700 tonnes down from 12 400 tonnes in the same period in 2018. Nonetheless, the average ex-vessel prices of headless shrimp in April 2019 weakened for all medium sizes (2/30 to 41/50) compared with April 2018, while price falls were marginal for larger sizes (U15, 15/20). The domestic supply source is becoming less relevant in the US market and wild shrimp is now just a specialty item offered by a few retailers and local restaurants.

In Argentina, the 2019 shrimp fishing season started with good catches of bigger sized shrimp, mostly in the 20/30 and 10/20 categories.

International Trade

Despite the record low shrimp prices since 2018, both US and EU28 imports decreased during the first quarter of 2019 in comparison with the same period in 2018, highlighting the saturated market demand and more than adequate unsold stocks along the distribution chain. However, strong imports by China and good consumer demand in other East Asian markets kept the international shrimp trade steady albeit at prices lower than in previous years.

Exports

During the first three months of 2019, India remained the top shrimp exporter but with shrinking growth (+6.5 percent in 2019 compared with +23 percent for the same period in 2018). Sales growth to China was extraordinary during this period (+595 percent at 25 000 tonnes), following lower import tariff implemented in December 2017, but exports from India suffered due to poor demand in the Western markets and corresponding low prices.

In contrast, Ecuador’s export growth was significantly high (+24 percent) during the review period, supported by 542 percent (48 100 tonnes) rise in supply to the top market, China, and also to the United States of America, Canada, the Russian Federation (+52 percent), South America and other Asian markets. Ecuador’s exports to Viet Nam declined by 29 percent to 34 700 tonnes. Export rise was marginal from Viet Nam, although official exports to China increased by 127 percent to 4 600 tonnes and also to Japan, Canada and the Russian Federation, but declined to the United States of America, EU28, Australia and Hong Kong SAR.

Imports

There were mixed trends in the global shrimp market during the first quarter of 2019. Imports declined in the EU28 and US markets. China maintained the high import growth and became the second largest import market, overtaking the United States of America. Imports also increased in Canada and the Russian Federation.

United States of America

For the first time in the decade, US shrimp imports contracted during the first quarter of 2019. Consumer demand was affected during Lent because of the unusual cold and stormy spring season in the East and Midwest, restricting dining out frequency. Subsequently, domestic stocks built up and January–March imports were nearly 10 000 tonnes lower than last year during the same period. Among the five main suppliers to the market, exports increased only from India (+17.6 percent) but declined from Indonesia, Ecuador, Viet Nam and Thailand.

The US trade war with China affected the shrimp imports from this source. As Chinese products are subject now to a 25 percent tariff, imports dropped by 60 percent during the review period. Supplies of the main item, breaded shrimp, were 47 percent lower at 3 900 tonnes, whereas the other value-added shrimp imports fell by 75 percent. Raw peeled shrimp imports declined from 4 000 tonnes to 231 tonnes and there were no imports of frozen shell-on shrimp from China to the United States of America during this period. Subsequently, there was a 16.5 percent shortfall in total US imports of breaded shrimp, even with compensated imports from Thailand, Viet Nam and Indonesia.

Japan

The availability of cheaper shrimp improved demand in 2019, particularly for semi-processed nobashi (stretched tail-on raw shrimp, used for making breaded or tempura shrimp), IQF raw peeled shrimp (widely used in noodle shops) and processed products such as cooked peeled shrimp, sushi shrimp, tempura shrimp, and shrimp pate for burger. 

To cater to the Spring festival demand in April/ May, the market imported 14 000 tonnes (+6.5 percent) of value-added shrimp during the first quarter of 2019, which represented 30 percent of the total shrimp imports during that period. Imports of raw shrimp decreased by 2 percent due to the waning consumer demand for shellon shrimp. Japan imported 44 700 tonnes (+0.7 percent) of shrimp during the first three months of 2019, mainly supplied by Viet Nam, Thailand, Indonesia, India and Argentina

European Union (Member Organization)

Shrimp demand in the world’s largest shrimp market remained lacklustre, even at record low prices of both tropical and the preferred Argentinian shrimp. This trend was reflected on the imports in EU28 for the review period, which declined by 3.5 percent to 175 600 tonnes, compared with the same period in 2018. Among the top markets, imports increased only in the Netherlands (mostly meant for re-exports within the EU28) and in the United Kingdom (35 percent consisted of processed shrimp). There were lower imports in Italy (-10 percent to 13 700 tonnes), Germany (-3.9 percent to 13 100 tonnes), Belgium (-15.7 percent to 10 000 tonnes).

Nearly 73 percent of the total shrimp supply came from Extra-EU28 sources, namely Ecuador (20 000 tonnes, -15.4 percent), India (16 300 tonnes, -8.7 percent), Argentina (15 300 tonnes, +23.2 percent), Viet Nam (15 300 tonnes, -4.2 percent), Greenland (13 000 tonnes, -8.0 percent) and Bangladesh (6 400 tonnes, +30 percent). Exports from India are still limited to a handful of processors certified by the national Export Inspection Agency of India, because of antibiotic residue in farmed shrimp from this source. At the end-consumer level, demand improved during Easter in April, particularly for Argentinian shrimp available at bargain prices. Summer purchases by importers were not so great.

Asia/Pacific

There was brisk demand for the Lunar New Year celebration in January/February in Asian Oriental markets. Led by China, an estimated 335 000 tonnes of shrimp were imported in 11 Asia/Pacific markets during the first quarter of 2019, which was 34 000 tonnes more than for the same period last year. In addition, some lion shares of local production in South East Asia went to the domestic fresh market at strong prices during this period.

China, the world’s largest producer and consumer of farmed shrimp, is a net importer of shrimp. Official imports during the first quarter of 2019 reached 138 100 tonnes (+245 percent). Another 30 000 tonnes are estimated to have entered the market from Viet Nam through unreported border trade, which has been declining drastically as a result of China’s stringent border control of unreported trade with Viet Nam.

Subsequently, shrimp imports in Viet Nam during the review period dropped by 39 percent, with decreasing supplies from Ecuador (-29 percent), India (-68 percent), Indonesia (-91 percent), Argentina (-66 percent) and many other sources. According to China’s shrimp trade association CAPPMA, frozen imported shrimp, which are cheaper than locally farmed shrimp, are increasingly used to produce value-added products. Some are also sold in the domestic market in the north, where fresh shrimp is not available. Presently, locally produced farmed shrimp are increasingly being directed to the domestic fresh and live market at higher prices.

During the first quarter of 2019, some 57 percent of China’s shrimp exports consisted of processed shrimp, while unprocessed raw shrimp exports declined by 26 percent. Local demand for head-on fresh shrimp in other southeast Asian countries (Singapore, Malaysia, Thailand, Viet Nam) remains good at stable prices, compared with the volatile international trade.

Price

There has been no meaningful recovery in export prices since the price crash in April 2018, even though production was seasonally low during January–March 2019. During this period, the average import prices of frozen shell-on shrimp in the United States of America were USD 1.20–1.40 per kg lower than in the same period of 2018 for most of the sizes except un/15 and 15/20, which were shortsupplied in the market and at origin. This lowprice situation also impacted the domestic US wild caught shrimp and Argentinian sea shrimp. In June 2019, prices of Argentinian large sizes shrimp in Europe dropped by EUR 0.20 per kg.

Outlook

Pond stocking in India during the main farming season of May–July has been much lower this year, suggesting a continuation of supply shortage for the rest of the year. Heavy rainfall in July affected production in the southern and eastern aquaculture belts of the country. Indian industry sources indicate a 30–40 percent production drop in 2019 compared with 2018.

Production is likely to be lower in Indonesia as well during the next harvest at the end of August. In China, the outcome of the seasonal first harvest in June is not encouraging either. In Argentina, supply from shrimp fisheries in the northern part of the country has contributed to sharp inventory built-up and prices are now descending quite rapidly. European importers are taking advantage of the favourable conditions and are stocking up for the coming months.

Further price declines are likely, with good catches expected to follow the recent opening of the most important shrimp fishery on 11 June 2019. After a successful large production of 500 000 tonnes and good sales in Ecuador this year, farmers are targeting for higher production in 2019 to increase exports to East Asia and Latin America. In Honduras, production is forecast to rise by 10 percent in 2019 compared with the harvests of 47 600 tonnes in 2018.

In the marketplace, shrimp consumption is likely to increase in the summer months between June and August in the Northern hemisphere and also in Japan during the corresponding Obon festival and school holidays. US cumulative imports for January–May 2019 show an almost 2 percent decrease from last year’s volume. As of mid-July, US trade inquiry for Indian shrimp was extremely poor with no movement in prices.

These are bad news for shrimp farmers, who may opt to reduce production for the rest of the year. During this period, Japanese imports of value-added shrimp maintained the positive growth and imports in China again increased by 217 percent compared with January–May 2018, with a 600 percent rise in imports from India and 430 percent from Ecuador. Shrimp packers worldwide are likely to focus more on the East Asian markets.

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