Lower supply and high prices are the characteristics of international shrimp trade at present.

Lower production of farmed shrimp associated with the disease problems in Asia and Latin America during the first half of the year and poor supply forecast for the rest of the year have pushed shrimp prices higher worldwide. US buyers are influencing market prices with strong demand, while Japanese imports are lower because of the weak yen. High shrimp prices have also made import demands lower on European markets.

Supply

Farmed shrimp supply did not increase much in Asia or in Latin America during the peak production season of May-September. The early mortality syndrome (EMS) problems in Thailand are being addressed but this year’s harvest production almost certainly will be half of last year’s volume. In Viet Nam overall supply during the first half of the year declined because of persistent disease problems in the central provinces and also in the Mekong Delta area. However, vannamei production increased as a result of a shift back to vannamei from black tiger. Production in Indonesia has been relatively stable, but raw material prices have almost doubled compared with last year, as a result of the supply shortage in Southeast Asia and the depreciation of the rupiah against the US dollar. Although good production has been obtained in India, the unrest in Andhra Pradesh state has resulted in serious disruptions in harvesting, transportation and the movements of the labour force, making the supply of raw materials for export processing quite difficult in this, the main shrimp producing state.

 In the USA the accumulated domestic landings up to June totaled 18 366 tonnes, a decrease of 2% in comparison with the same period in 2012.

For the wild caught Argentinean ‘seabob’ shrimp (Penaeus muelleri), another good year is predicted for 2013. Landings during the January to July 2013 period were above 31 000 tonnes, indicating stable supply this year.

Market trends during the first half of the year

Raw material shortage worldwide kept shrimp prices firm with a temporary weakening during May and June. During the first half of the year, import growth was stagnant in the two large western markets of the EU and USA. In Japan, there was no real recovery in consumer demand as import costs increased, associated with the weak yen. Supply shortage at origins and strong demand from US buyers pushed shrimp prices to record high levels.

Japan

Demand for raw shrimp tempered in Japanese market

The Japanese market is totally dependent on imported supplies of shrimp and the weaker yen, increased landing costs and rising international prices all contribute to a tough situation. Demand for raw shrimp is suffering and preference for processed shrimp imports has increased. Japanese importers must compete with US buyers but the weak yen makes this difficult. Hence imports slowed down, particularly for raw frozen shrimp. Poor supplies of shell-on shrimp from Thailand and high prices also affected shrimp demand in the supermarket trade. Imports of processed shrimp are a better option in the current situation.

Consumer demand slowed down after the summer holiday but prices increased further in Japanese wholesale trade, as a result of falling domestic inventories and poor supply forecast in producing countries. Export prices have also increased in south and Southeast Asian producing countries as many of these currencies have weakened against the US dollar and raw material prices continue to rise.

Imports

Imports during the period January to June 2013 fell below last year’s as result of lower supplies of raw frozen products. However, processed shrimp imports increased, which is a reflection of the market as domestic reprocessing costs escalate in Japan.

Imports of raw frozen shrimp in the January-June period were 1.38% lower, although supplies increased from Indonesia, Viet Nam and India. Processed shrimp imports went up by 2.18% compared with the same period last year. Supplies of cooked frozen shrimp and sushi shrimp were 6.13% and 32% higher respectively.

Global market trends

According to a recent survey, the import price of vannamei shrimp from Thailand increased by almost 50% (in yen terms) in July compared with the same month last year, which was a result of the weakening yen and rising export prices from the origin. Cumulative imports of raw frozen shrimp were also at a record low from Thailand (-33%) from January to July 2013 compared with the same period last year.

Domestic sales prices have increased. By the end of August, wholesale prices of vannamei shrimp were 6% higher than those of July, even though the peak holiday demand was over by mid-August.

In late August, contract prices for Indian headless vannamei increased by nearly 20% to USD 15.70/kg compared with USD 13.10/kg in June. Export prices of black tiger shrimp from India also increased almost at the same rate, reaching USD 15.50/kg, CFR Japan. Competition is also strong from US buyers, while shrimp demand from Europe is improving as well.

No countervailing duties for countries involved

The US International Trade Commission (USITC) ruled four to two in favour of abandoning the imposition of countervailing duties on imported warmwater shrimp from the seven countries that had been accused of subsidizing their shrimp industries. The countries involved were Ecuador, China, India, Viet Nam, Thailand, Indonesia and Malaysia The USITC did not find that there was a real damage for US domestic shrimp industry.

The Gulf of Mexico shrimp producers supply only one-tenth of the shrimp consumed in the US. They are yet to decide whether to appeal the case. The producers had argued that fuel costs have hampered competition with shrimp farms in Asia as they "receive government support" and that government subsidies abroad threaten to destroy the domestic shrimp business.

USA - Imports

In general, shrimp supplies to the US market are lower both because of EMS in Asia and the high occurrence of white spot disease in Latin American countries, mainly Mexico.

The supply shortfall from Thailand was 32% in the January to June period against the same period last year. Ecuador is still in second place but the difference has narrowed considerably this year. Indian supplies during this period increased by 82%, moving from 9th place in 2009 to 3rd this year in half-yearly imports. Despite the import surge from India, overall import during the first half of the year was nearly 16 000 tonnes or 7% down on last year. However, in terms of price and volume of imports, the US continues to dominate international shrimp trade.

Europe - Quiet market for the first half of the year

European shrimp markets were quiet during the first six months of the year. Sluggish domestic demand and high shrimp prices because of short supplies prompted many European buyers to withdraw from the international market as they were unable to compete with buyers from other countries. Buying activities were mainly focused on immediate needs. Only in the last two months have concerted efforts been made to buy consistently and pay competitive prices to refill depleted inventories.

The slow demand is reflected in lower shrimp imports into the EU. For the first six months of the year total shrimp imports into the EU-27 declined by 7% while shipments from the third countries (extra-trade) declined by 7.7% on a year on year basis. There were sharp drops in supplies from Thailand (-33.3%), China (-12.4%), Ecuador (-5.7%) and also Viet Nam (-4.5%). Increased supplies from India (+12.5%), Greenland (+7.4%) and Denmark (+11.2%) were unable to offset the declines.

Shrimp imports into major European markets also posted negative growths except to Italy, which grew marginally by almost 4% as more shipments were recorded from Spain (+13.9%) and Argentina (+36.8%). Imports from Ecuador, the largest supplier, went down slightly by 2.1%.

Germany is highly dependent on shrimp supplies from Asia and the most affected country as German imports dropped sharply by more than 16% with lower shipments from Thailand (-27.8%), Viet Nam (-23.4%) and Bangladesh (-21.6%). Only India shipped more to this market (+9%).

India and Bangladesh are two major Asian producing countries that have not been affected by the EMS problem and they generally did well in all major markets. Imports from India and Bangladesh to the UK market increased sharply by 13.5% and 27.6% respectively, but shipments from Thailand, the number one supplier, dropped by 24.5%. Shrimp imports into France also declined marginally by 1.6% this year largely as a result of lower supply from Thailand (-47.1%), which could not be compensated for by increased supplies from Ecuador (+21.9%), Bangladesh (+44.4%), India (+3.2%) and also Viet Nam (+4.8%).

The largest shrimp market in the EU, Spain, continued on a downward trend. Imports declined by 11.6% while exports fell almost 8% in the January-June period this year. Supplies from all sources declined with shipments from Argentina, Ecuador and China, the three largest suppliers, falling by 2.6%, 20.7% and 16% respectively.

Supply shortages in Asia have benefited Denmark, the main shrimp producing/exporting country in the EU, to some extent. Exports from Denmark went up by 9.0% while imports, mainly of raw material for re-processing, were slightly up by 1% with more supplies coming from Greenland (+8%).

Imports by both the Netherlands and Belgium fell by 21.7% and 15.3% respectively. Re-export activities from these two countries were also affected. During the reporting period shrimp exports from the Netherlands declined by 15.5% while from Belgium the drop was 11.1%.

Asia - Demand from China continues to grow

Buyers from China have been actively buying shrimp from major producing countries in Asia, particularly from India. Purchases were made at competitive prices, matching those paid by US buyers. As a result, shrimp imports into China for January-June this year were significantly up by 16.4% with more supplies coming from both Asian and also Latin American sources. Supplies from Ecuador and India increased by 117.6% and 130.8% respectively, while from Greenland imports were up by around 53%. Canada remained the largest supplier to China but shipments dropped by 14.7% this year.

Though overseas demand has been very strong and prices have been rising rapidly, Indian shrimp packers have had to face environmental problems as well as political challenges. Raw materials shortage because of diminished crops, heavy rains, white spot disease and the on-going political problems in Andhra Pradesh have badly affected the delivery of shrimp from farms to processing plants, as the transportation systems were also paralyzed. As a result, ex-farm prices of vannamei shrimp in Andhra Pradesh reportedly jumped to INR 400-500/kg (USD 6.5-8.2) in August from INR 200-300/kg (USD 3.3-4.9/Kg) last year for the count 30/kg.

The Thai Shrimp Association said that there have been encouraging signs that EMS is abating and that shrimp supply in the second half of this year is expected to improve. Thai shrimp companies have been importing raw materials from other countries, such as Ecuador and India, to keep their processing plants running. The association predicted that shrimp exports from Thailand may drop by 50% this year because of the lower harvest. In the past Thailand shipped an average of 350 000 tonnes annually. The association urged the EU to extend the preferential tariff for Thai shrimp under the Generalized System of Preferences (GSP), citing the industry’s huge losses as a result of EMS. Thai shrimp is scheduled to lose its GSP effective 1 January 2014 and the import tariff will increase from the current 7% to 12%.

Despite having similar problem as Thailand, Viet Nam’s shrimp exports generated USD 1.67 billion for the first eight months of 2013, up 18% against the same period last year. According to the country’s Association of Seafood Exporters and Producers (VASEP), the proportion of exports of black tiger to vannamei shrimp was more or less equal in terms of quantity.

Outlook

The over-riding factor in the supply situation in Asia is the low production in Thailand, which could be about 300 000 tonnes in 2013. In contrast, Indian and Indonesian supplies of vannamei are expected to be higher than last year. Indonesia’s production in 2013 is expected to be above 500 000 tonnes.

The latest decision by the USITC on countervailing duties has ended speculation in the market. Now decisions on strategies for future procurements will be able to be made. However, there is resistance to buying by restaurants and retailers. Therefore in the coming months actual demand could slow down. If that happens, some prices will stabilize or even decline. In this way, consumers can influence market directions.

Supply shortfall for raw shrimp will continue in the Japanese market, which will have a negative impact on per capita shrimp consumption in 2013. The positive trend in value added shrimp imports is likely to persist. Renewed buying interest from EU shrimp importers have been seen since early September. However, the high price will be the factor that will limit demand in many European markets.

The recent weakening of Southeast Asian currencies against the US dollar will impact regional demand for shrimp.