First quarter farmed shrimp production moderate with export prices weakening, generating further demand in international trade

Most of the producing countries reported higher volume exports during the first quarter period. However, export revenues suffered as prices declined 20-30% in the international market. Imports increased in the western markets as they paid less compared with last year.

Supply

January-March is generally a low production period for shrimp. However, supplies were moderate in Asia. Shrimp exports from Thailand in the first quarter demonstrated positive trends after many years, though the actual production status is still disappointing as the sector continues to face difficulties.

"Although Thai farmers have adapted to the situation, total productivity is down even against the already bad numbers from last year", stated a leading aquaculturist.

Harvests mostly consisted of smaller sizes as farmers opted to grow smaller shrimp due to the EMS scare. Volume sales in the Mahachai wholesale market have been lower compared with last year’s. According to the Bangkok Post, shrimp farmers are struggling with falling market prices due to EMS and seeking the government’s assistance to stabilize local prices, ease financial liquidity for exporters and address the EMS issue.

In India, farmed shrimp production was moderate during the first quarter of the year. Farmers in West Bengal are focusing more on vannamei (70%) and less on black tiger shrimp (30%). The brood stock availability has been reported as adequate in India for the current season but there is a shortage of live larval feed known as artemia. According to the All India Shrimp Hatcheries Association, some technical barriers are affecting the imports of artemia needed in the shrimp hatcheries.

In Viet Nam, production was seasonally low during the January–March period and imports of frozen raw shrimp surpassed the volume during this same period last year.

In China, the largest producer of farmed shrimp, local supplies were seasonally low until April/May. The EMS disease remains a challenge.

Meanwhile, the USA, Japan and the EU reported unauthorized veterinary drug residues in shrimp imported from Viet Nam, as well as from India, Malaysia and China. 

Latin America

Ecuador managed to stay EMS free with strong harvests reported during the January-March period. Production also seems to have improved in Mexico. However, there are reports of EMS occurrence in Honduras and Nicaragua.

Wild-caught shrimp

Landings of domestic shrimp in the US Gulf of Mexico totaled 8 982 tonnes from January-May this year, which is a 35% rise when compared with the same period last year. With this increase in landings, the average ex-vessel price of shrimp weakened.

Import and export trends

During the first quarter 2015, sale volumes of shrimp increased in the international market compared with the same period last year, supported by good availability of shrimp and 20-30% declines in export prices compared with the first quarter of 2014.

Imports increased in the USA and Canada as well as some EU markets, including Spain, France, Italy, the UK, the Netherlands, and Germany.

During the first quarter, Japanese demand was weak with lower imports. However, demand began to improve in April 2015. Imports were also lower in China and in Australia compared with the first quarter 2014 but increased in the Republic of Korea, Hong Kong SAR, Malaysia, Taiwan Province of China (PC), and Singapore. India increased exports to the Middle East

With 80 600 tonnes of exports, Ecuador was the number one shrimp exporter in the world during the first quarter 2015. According to national data, India was the second top exporter, exporting 75 000 tonnes during the same period, Exports increased from Indonesia and Thailand (34 800 tonnes, +10%) during the first quarter but declined from China.

During the first quarter 2015, Vietnamese exports to the USA and Japan declined but increased to the EU, Canada, the Republic of Korea and China (through large border trade) compared with the same period last year. However, during the longer January-May time period, VASEP reported that due to antibiotic contamination, Viet Nam’s exports to the USA and Japan declined further by 56% and 27.6% respectively compared with the same period last year. Exports to the EU declined by 3.1% during this time period. Also from January-May, the USA returned 25 Vietnamese shrimp batches, Japan returned 7 and the EU 4.

Japan

Since December 2013, the yen has been weak against the US dollar, making importing prices higher in Japan despite the price decline in the international market. With this development, first quarter imports of raw and processed shrimp were at a five-year record low, down by 21%. Raw shrimp imports declined by 33%, likely due in part to the absence of promotional sales in supermarkets during the spring festival.

During the first quarter, supplies of tropical and cold water shrimp in Japan were lower from Viet Nam (-10%), India (-22%), Thailand (-19%), China (-26%) Argentina (-66%), the Russian Federation (-9%) and Canada (-17%) when compared with the same period in 2014. Imports increased only from Indonesia (+8.8% ).

In April, inventories in the market fell by 5.3% against March and remained 8.18% lower than compared with April 2014.

During the spring festival, demand for processed shrimp improved, with supermarkets selling more to-go tempura and cooked shrimp products. Promotional sales of raw shell-on shrimp were completely absent in the retail market.

The Japanese restaurant trade reported strong business during the first quarter due to the influx of tourists, particularly from China during the Lunar New Year holidays in February. A Government report stated that total spending by tourists increased by nearly 65%, hitting a record of JPY 706.6 billion during the first quarter of 2015 compared with the same period in 2014.

USA

The beginning of 2015 was marked by severe cold that affected shrimp consumption in the US market, particularly during Lent when seafood sales are generally good. As a result, distributors were burdened with huge inventories of shrimp. Wholesale buyers knew that cold storage facilities remained quite full and that they could bargain with importers, making prices unstable. As a result, import prices fell further. Taking advantage of the price situation, the market imported more shrimp from Asia and Latin America during the first quarter. Supplies of domestic shrimp also increased this year compared with last year.

Total US shrimp imports during this period were 9 000 tonnes higher, totaling 135 100 tonnes, which demonstrates 6.3% growth compared with the January-March period last year. However, the import value declined to USD 1.39 billion compared with USD 1.60 billion, due to the 19-20% decline in the average import prices (USD 10.30 per kg in January-March 2015 versus USD 12.60 per kg in January-March 2014). Indonesia was the top supplier of shrimp to the US market followed by India, Ecuador, Thailand and Viet Nam. Compared with the first quarter of 2014, supplies increased from Thailand but remained significantly below previous levels.

Imports of shell-on and prepared shrimp increased during this period but declined for peeled shrimp (-8.63%), suggesting heavy local inventories. In shell-on imports, including the easy-peel products, supplies increased for large sizes un/15, and medium sizes of 21/25, 31/40 and 41/50 counts.

Since late May, the weather has been conducive in the USA and retail shrimp prices have adjusted. With the start of the summer and holiday months, consumer demand for all types of shrimp is on the rise.

Another development in the US retail trade is the growing demand for good quality medium/small sized (50-60/pcs per kg) head-on vannamei, which are sold at Asian supermarkets in increasing volume. Most of this type of product comes from Ecuador.

EU

During the first quarter of the year, the general demand for shrimp in the EU market was low. However, falling offer prices from exporting countries resulted in import growth, with first quarter imports at their highest level in four years. India has overtaken Ecuador as the number one supplier, with a 2.5% rise in exports to the EU. Compared with the same period last year, supplies from Ecuador fell by 16%.

In total shrimp imports (intra- and extra-EU trade) the top markets were Spain, France, Denmark, the UK, Netherlands, Italy, Belgium and Germany. Supplies increased in all of these markets. There were also higher imports into Poland and other smaller markets, including Bulgaria, Czech Republic, and Slovenia.

Slightly over 75% of EU shrimp imports came from external EU-28 countries to total 124 200 tonnes; an estimated 18-20% of these were value-added shrimp. Imports of raw frozen tropical shrimp totaled 86 000 tonnes.

Summer demand in Europe has started to improve with better sales underway, particularly in the southern regions (Spain, Italy, Portugal and France). However, import inquiries were low in May/June, possibly because of sufficient stocks in the market. Importers who still consider the present market prices as high, are expecting further price discounts with the anticipated rise in production during July-September.

Asia and other markets

In Asia, there were higher imports in the Republic of Korea, Hong Kong SAR, Malaysia, Taiwan PC and Singapore due to the strong demand during the Lunar New Year celebration in February/March.

Official data in China reported reduced imports during this period (-14%). However, through border trade between Viet Nam and China, an increased volume of shrimp entered the Chinese market prior to the Chinese New Year in February. Most of this volume was imported from Ecuador and India.

Lower shrimp prices in the international market induced demand in many markets worldwide. During the first quarter of 2015, imports increased in Canada by 39% compared with the same period last year to total 11 410 tonnes. Mexican imports were lower, indicating a recovery in the aquaculture production of shrimp. Imports were also lower in Russia (-64%), Australia (-13%) and in New Zealand -10%) during the reporting period.

Government prosecutors in China are preparing to try the country’s largest-ever seafood smuggling network in court after scores of arrests nationwide. Smugglers mislabeled seafood products coming into China in order to pay lower customs taxes. Reportedly, 21 “seafood smuggling cells” were targeted across the country and 31 people were arrested in Zhanjiang (a key shrimp trading hub), Tianjin and Beijing. Frozen fishery products, including shrimp imported from Canada, India, Norway and Thailand, were seized by customs authorities in the southern port city of Guangzhou.

In Asia, Viet Nam remained the largest importer of frozen shrimp as raw material for its processing industry during the first quarter period, buying over 40 000 tonnes. While the present import demand from the USA and Europe is low, exporters in Ecuador and India have increasingly focused on the Vietnamese market. Indeed, Vietnamese imports from Ecuador increased by 130% and from India by 64% during the first quarter compared with the same time period last year. Viet Nam also reported higher shrimp imports from Thailand and Canada.

In Bangladesh, black tiger shrimp producers have started to tap the domestic market as the traditional export markets to the USA and the EU continue to import less and pay very low prices. Although the volume is still low and is targeting only a niche market, shrimp in the domestic market are fetching better prices, with the volume expected to increase in the future. According to national data, export revenue from shrimp in Bangladesh declined by 3.6% year-on-year to USD 440.50 million, during the first ten months of the fiscal year (July-June 2014/2015).

Outlook

Monthly shrimp imports into Japan increased in April and consumption is expected to improve during the July-August holiday season. There are also signs that consumer demand for shrimp is improving in the USA as market prices adjusted following lower import costs. These are all positive developments for marketers.

However, shrimp prices are likely to stay soft compared with last year’s prices. The market can also expect that with rising production, export prices will weaken further. Producers may work to reduce farming activities during the next crop seeding if oversupply continues to be an issue.