Shrimp - November 2015

09/12/2015

Weak market prices persist in 2015 but import demand remains disappointing

In the first half of 2015, global production of farmed shrimp was lower than the same time period last year, particularly with less than expected harvests in Asia. Production in Ecuador was higher during this period, with Viet nam as their top export market. Shrimp prices plummeted by 15-20% in international trade compared with the first six months of 2014 as a result of the supply and demand disparity in the USA, the EU and Japan. For exports, India, Indonesia and Thailand managed to increase their volumes to the USA, albeit with plummeting export revenues. There were also higher imports to Viet Nam, the Republic of Korea and China during this period.

Supply 
Farmed shrimp
In Asia, the season that usually begins around April/May was very delayed this year. The extreme hot weather in India caused a three-month delay in the monsoon, causing non-viral disease in certain areas and affecting overall production volume. 
In India’s Andhra Pradesh, the country’s largest vannamei farming area, aquaculture production has been 30% lower during the first half the year. Harvests also remained lower than last year’s in Orissa but increased moderately in Gujarat, Kerala and West Bengal. According to industry sources, total Indian farmed shrimp could be anywhere from 10-20% lower in 2015 compared with 2014. 
Production in Viet Nam, China and Malaysia has been lower due to disease problems. However, for the first time since 2012, farmed shrimp production in Thailand recovered, reaching nearly 160, 000 tonnes during the January-September period. Total Thai production in 2015 is likely to be 250 00 tonnes, an increase of 35 000 tonnes compared with production in 2014. Exports have increased accordingly. 
In China, shrimp disease surfaced frequently, taking its toll on shrimp aquaculture in the southern provinces of Hainan and Fujian. As a result, the shrimp growth rate has slowed down considerably, making production volume much lower than average. This coupled with falling market prices forced many farmers to raise alternative aquatic species.
During the first six months of 2015, Vietnamese shrimp farmers reduced their stocking density by 30% to combat EMS and falling export prices. The industry association VASEP calculated a 1.6% decline in vannamei production during this period against the same period last year. Reportedly, large farms are doing well but production declined at the small-scale level. Local raw material shortages resulted in higher imports of shrimp for re-export and export processing, especially from as far away as Ecuador. 
Farmed shrimp production increased in Ecuador during the first half of the year due to early harvesting in May because of the EMS scare. Since July, farmers have opted for lower stocking density to reduce mortality. Beginning in late April, some farmers decided to emergency harvest and as a result, Ecuador’s shrimp production in May reached 30 000 tonnes compared with last May’s monthly average of 23 000 tonnes. The National Fisheries Institute in Ecuador however, denied the presence of EMS in the country. 
This year, supplies in Honduras and Nicaragua are being affected by EMS disease. In Mexico, the situation has improved, and farmed shrimp production has increased compared with last year

Wild-caught shrimp
There was a marginal decline in cumulative landings of shrimp (-3.8%) in the US Gulf of Mexico during the first six months of 2015 compared with the same time period in 2014. Ex-vessel prices of all medium sized shell-on products weakened significantly.

Import and export trends 
In general, global demand for shrimp softened during the January–June 2015 period compared with the same time period in 2014. 
Stronger US dollar and weak export prices supported higher imports into the US market. Yet imports declined in other developed markets, notably in the EU, Switzerland, Japan, Australia and New Zealand compared with the same period last year. In Russia, the weak rubel and depressed economy sunk imports by a notable 64% during the reporting period. 
However, imports into the East Asian markets of China and the Republic of Korea increased for domestic consumption. 
In the global market, weaker shrimp prices during the first half of the year have taken a toll on export revenues in the major producing countries, although quantitatively exports have increased. 
Ecuador was the world’s number one shrimp exporter during the January-June period, as exports totaled 167 291 tonnes, demonstrating 15% volume growth compared with the same period last year. However, in value terms, exports fell by 13%. India held the second position, exporting 12% more than last year’s volume to total 160 957 tonnes. Exports increased from Thailand by 6% (70 562 tonnes) and also from Indonesia. In Viet Nam, VASEP reported a 17% drop in shrimp’s export value.

USA
The USA is the world’s single largest import market for shrimp. As such, it influences international shrimp prices significantly. During the first half of 2015, US importers paid 20% less for shrimp imports compared with last year but end consumers in the USA, particularly in the retail market, did not benefit much from this development due to the high priced inventory market.
Outdoor dining improved during the summer holiday months (June-August) with greater demand for shrimp benefiting the restaurant trade. Lower import prices also induced higher imports during the first half of the year, even with more than sufficient stocks in the market. 
The US shrimp market remains oversupplied because of increased catches of domestic shrimp this year. Total shrimp supplies (imports plus US domestic landings) were about 8-10% above 2014’s figure. Meanwhile, wholesale buyers remained conservative, buying only on immediate orders. 
Wholesale prices in the US shrimp market remain largely unstable and at a low level due to several factors. First, demand is tight. In addition, wholesale buyers are wary of the constant message from Thailand that the EMS issue has been solved and more shrimp will be able to come into the USA. 
During the first half of 2015, import volumes of shrimp into the USA increased by 8% to total 268 600 tonnes compared with 248 300 tonnes in 2014. However, the import value declined by nearly 15% at USD 2.6 billion during this period. 
Supplies of shell-on products increased from Ecuador, India and Indonesia. In the semi-processed raw tail-on category, and for value-added shrimp, Thailand was the top exporter with increased supplies this year. During the first half of 2015, US imports from Indonesia grew but declined from Viet Nam.
Although US imports increased, the market is yet to rebound completely according to industry sources. Distributors are still buying based on what is needed. Overall, inventories remain excessive, with the exception of wild larger sizes.

Japan
Even though Japanese shrimp imports have declined significantly over the years, Japan still remains the second largest importer after the USA. 
In 2015, Japanese shrimp consumption seems to have improved with supermarkets holding more promotional campaigns compared with the last two years. However, the weak yen could not support higher imports and supplies declined by nearly 8% during the first half of the year against the same period last year. Imports of both raw frozen and value-added shrimp reported declines in the first half of 2015, the former by 9% when compared with the first half of 2014.
Summer holiday demand for shrimp in July/August was strong for processed shrimp but retail sales of raw shrimp did not pick up much due to the extremely hot weather. Japanese supermarkets are likely to continue promotional campaigns during their year-end sales as shrimp prices remain below levels within the past two years.

EU
During the first quarter of the year, EU total shrimp imports increased marginally but took a dip again by the middle of the year. During January-June 2015, both intra- and extra-EU imports of shrimp fell below the same period last year, which marketers say is a result of sufficient stocks in the weak consumer market.
Among the top suppliers of tropical shrimp, exports declined from Ecuador (-10%) and India (-8%) but increased from Viet Nam (+15.5%). Imports of cold-water shrimp increased significantly from Argentina (+27.4%) but fell from Iceland due to the supply factor. 
In the individual EU market, there were higher imports in Spain, France, Sweden, Portugal, Poland and Greece. 
Outside of the EU, the Swiss and Norwegian markets imported less during January-June 2015 compared with the same period last year. Russia imported only 9 500 tonnes of shrimp during this period, a 64% reduction compared with this period in 2014. Imports of tropical shrimp suffered while imports of cold water shrimp from Greenland were significantly higher at 4 179 tonnes.

Asia/Pacific 
When comparing the first half of 2015 year-on-year, there were mixed import trends in the Asia/Pacific shrimp market. In the developed markets, Australia and New Zealand imported less, by -25% and -17% respectively. 
China’s imports were slightly higher (+5%) due to reduced domestic production. Imports into the non-producing market of the Republic of Korea increased moderately by 10% at 31 000 tonnes; Hong Kong SAR’s imports were stable at 23 000 tonnes. Malaysia imported 8% more as local production of farmed shrimp suffered due to EMS. 
According to data from exporting countries, Viet Nam imported more than 100 000 tonnes of shrimp during January-June this year, which is 68% higher than compared with last year’s period. Viet Nam was the number one export market for Ecuador during the first half of the year, while for India, it was the second largest export market after the USA.
The weakening of average import prices in Asia has been lower (5-15%) than that in western markets. Indeed, retail prices of shrimp in East Asian markets have remained high since the beginning of this year. Malaysia is an important market for shrimp in Southeast Asia where retail prices of fresh vannamei were almost 50% higher in August compared with the same month in 2014. More so, the devaluation of the national currency in Malaysia by almost 30% has made imports more expensive from neighbouring countries.

Outlook 
In India, vannamei shrimp prices began strengthening in October for some sizes. Large sizes are in short supply. Indian farmers are being conservative in pond stocking and the next harvest season will be in December, with supplies expected to decline. The seasonal wind down will also reduce production in China and Viet Nam. 
In Ecuador, lower shrimp volumes were expected from the September harvest, as many farmers have opted for low density stocking. As a result, prices may bottom out in the short-term. However, the US market is holding significant supply and importers seem to be less aggressive. Lower inventory in Europe may generate limited demand for year-end sales. 
Even with falling supply, the shrimp market is likely to remain demand driven until the end of the year.

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