As of mid-June, the seasonal harvest throughout Asia remains below that of last year. In Thailand the leading supplier to the international market, the seasonal peak of the harvest is only expected in July. It has been delayed by two months because of the floods that washed away 50 000 – 60 000 tonnes of farmed shrimp. This year, the shrimp harvest is predicted to decline by 10-15% in Thailand, resulting in price increases of up to 40%. With this changed scenario, farmers have moved away from contract farming preferring spot prices and cash payments, while packers only receive orders for a maximum three months delivery to reduce risk. The supply situation started to improve from mid-June.
Compared with the past two years, this year’s supply outlook has improved in Indonesia.
In Viet Nam shrimp farms were affected by what was said to be the ‘worst outbreak of disease’, encompassing an area of 53 000 hectares in seven provinces of the Mekong Delta. Mass premature death of 20-30 days old shrimp wiped out nearly 98% of crops, including almost 20 000 ha in Soc Trang, 8 600 ha in Bac Lieu and 6 600 ha in Tra Vinh. As a result of the raw material shortage, processing plants in the region are only operating at 50-60% capacity. This has pushed up farm gate prices to highs of VND 210 000-240 000/kg. This situation may continue for the next two months.
The situation in southern India is the reverse, where bumper crops for vannamei shrimp are being harvested in June and July. To accommodate this large supply processing plants are running at 150-200% capacity using two shifts. Demand for Indian shrimp has been strong from the US market without much deviation in price. Indian farmers also produce large vannamei, not easily available from other sources. On the contrary, as vannamei farming increases, supplies of black tiger shrimp are falling in India. Last year, India harvested 150 000 tonnes of farmed vannamei and black tiger shrimp, against 105 000 tonnes in 2009. The Kolkata region remains the main area for black tiger farming while the southern aquaculture region is shifting more and more to vannamei.
Raw material shortage has kept prices firm in the international market
Traditionally shrimp prices start to ease in international markets when supplies of farmed shrimp improve from May/June each year. However, this trend is absent this year. The offer prices by packers increased further for black tiger and vannamei shrimp in June and July when the supply situation remained difficult in the producing countries. The news of serious crop failure in Viet Nam is putting further pressure on the market. Offer prices for headless black tiger shrimp from Indonesia reached USD 15.30-15.70/kg for 16/20 shell-on counts for the Japanese market, and the trend is also similar for high quality Indian products. There is no ruling price at the moment for shell-on products from Viet Nam because of the raw material shortage in the Mekong Delta. This area supplies substantial quantities of nobashi shrimp to Japan but packers are currently running on 40-50% capacity as a result of the acute raw material shortage. The situation may mean that more raw material will be imported by Viet Nam for processing for export. Vannamei prices from Thailand have eased recently along with improved supplies.
Japanese shrimp market remained steady but with lower imports this year
Household consumption of shrimp during the first quarter of 2011 was nearly 11% lower, compared with 2010. This was mainly a result of the Tohoku earthquake and tsunami in March. This consumption pattern continued into the second quarter as consumers continue to be affected by the aftermath of the tsunami, the nuclear radiation scare and power rationing nationwide.
Consumer demand improved, although temporarily,in late June when the mid-year bonuses were available. Inventories throughout the distribution chain are low for all types of shrimp, which have kept market prices steady during the first half of the year.
Cumulative shrimp imports for January-March were 6.4% higher than last year’s, which is reflection of the strong market prior to the disaster. The market continues to focus on value-added imports, which make up 66% of the 60 840 tonnes that were imported during January- March 2011. Raw shrimp imports posted a mere 2.87% rise compared with the 6.40% increase in the value-added varieties. Thailand was the major source of supply of processed shrimp; imports of shrimp sushi (with rice) doubled during this period, mostly from China.
Sellers are skeptical about a real change for the rest of the year; however, moderate imports have taken place since May to replenish stocks for summer sales in July and August.
East Asian domestic and regional markets absorb more supplies
The non-Japanese markets in East Asia remained strong for fresh and frozen shrimp during the first quarter of 2011. The Lunar New Year celebration in February was one of the reasons for higher shrimp consumption in the Republic of Korea, China, Hong Kong SAR and Singapore markets. Consumption was also high in the producing countries of Malaysia, Viet Nam and Thailand during the Chinese New Year when the shrimp price increased by 15-20% for fresh products in the retail trade. This strong price trend is continuing along with lower supplies in the producing countries.
While overall shrimp consumption in China is possibly the highest in the region, imports into the Republic of Korea superseded those of China by nearly 14 000 tonnes during January- March 2011, almost 17% more than the same period last year; China and Viet Nam were the main suppliers.
China’s fresh and frozen shrimp exports, during the first quarter of 2011 posted a 25% rise compared with the same period last year.
Overall direction of the US market seems more positive than last year
The continuing high prices of shrimp are an indication of this positive trend. The summer holiday season is expected to generate improved demand in the market including in the restaurant and catering trade. This is offset by major Asian suppliers announcing lower harvests than expected, and Latin-American producers are not able to compensate for that loss in supply. However, the weakening US dollar and short supplies in Asian producing countries put importers in a difficult position as they are less competitive compared with the strong bargaining power of buyers from Europe and Asia.
In the first quarter of this year, US shrimp imports reached 115 200 tonnes, an increase of 3.9% compared with the same period of 2010. Imports grew significantly in value reaching USD 1 009.4 million, an increase of 31.3%. The impressive increase in value is explained mainly by the record high prices. Interestingly, despite the skyrocketing prices, imports did not fall; on the contrary they rose slightly. This is a sign of the better health of the US economy and of consumers’ confidence. The average price per tonne for the first quarter of 2010 was USD 6 932.4 and for this year it was USD 8 762.2, an increase of 26.4%.This is explained by the shift of imports from smaller counts to medium counts, which are more expensive, and by the increase in imports of value-added shrimp (mainly peeled frozen). The value of peeled frozen shrimp imports was more than USD 100 million higher than in the same period of 2010 and the import value of headless shell-on frozen was also higher.
Thailand remained the major shrimp exporter to the US with 39 100 tonnes, but its market share fell from 35.3% to 33.9% as their exports remained constant while others grew. In the first quarter of 2010 second place Ecuador exported 14 800 tonnes, a market share of 13.3%, but in 2011 Thailand was followed by Indonesia with exports of 16 700 tonnes, increasing its market share from 13.2% to 14.5%. Ecuador increased its exports by approximately 400 tonnes, but market share fell to 13.2%. Imports from Viet Nam, Malaysia, Bangladesh and Peru increased by 23.8%, 22.9%, 58.3% and 30% respectively. The most noteworthy performance for the period was that of India, becoming the sixth major shrimp exporter with 7 300 tonnes, increasing its market share from 3.2% to 6.3%. According to several observers this trend is likely to continue as harvests are predicted to continue growing. Imports from Mexico and China decreased by 48.8% and 16.5%. The Mexican shrimp export decrease is related to the ban imposed by the US authorities on wild shrimp captured without the use of TEDs, as well as to the weakness of the US dollar.
Shrimp supply, particularly vannamei, has improved since mid June from India and also from Thailand, thus a price correction is predicted in the coming months.
Import value boost owing to significant increase of peeled frozen and medium counts headless shell-on imports
In volume, imports of headless shell-on counts 51/60 and smaller decreased significantly, with the >70 decreasing almost 30%, explained by an average rise in price of 34.6%. On the contrary, imports of headless shell-on counts 15/20, 21/25, 26/30 and 31/40 increased by 11%, 18.6%, 20.3% and 18.6% respectively. Other counts remained stable. Imports of peeled frozen rose 14.4% and other frozen preparations rose by 74.3%.
Unit value increased in all product categories. Headless shell-on frozen prices increased on average 33.1%. This increase was mainly the result of an increase in prices of big and medium counts. 15/20 and 21/25 counts prices increased above the average, with increments of 37% and 38% respectively.
US Domestic supply
From January to April domestic landings totaled 5 666 tonnes, an increase of 5.8% compared with the same period of 2010. While Florida and Alabama had a decrease in landings of 15.4% and 49.6%, Mississippi, Louisiana and Texas increased their landings significantly by 39.9%, 38.7% and 18.8% respectively. Despite the increased supply, the price rises are mainly the result of the weakness of the dollar, high oil prices and a stronger demand as summer arrives. However, there are reports that these record high prices (mainly in the bigger counts) are beginning to find resistance in demand so price reductions in some counts might be seen in the near future.
Europe: Strong demand continues despite financial crisis
Demand for shrimp in the EU market posted strong growth this year as reflected by increasing imports despite the current financial crisis in some member countries. The strengthening of the Euro against the US dollar in recent months has also been an advantage for European buyers to compete with buyers from other countries in sourcing more shrimp from Asian and Latin American countries. As a result, during the first quarter of 2011, EU frozen shrimp imports from third countries grew by 19.1% in volume and 42.7% in value in a year-on-year basis, totaling 103 972 tonnes worth EUR 515.5 million (USD 736 million). Ecuador, as the leading supplier, increased its shipment by 35.9% in quantity, followed by India (+11.5%), Greenland (+34.7%), China (+31%), Bangladesh (+38.6%), Viet Nam (+39.6%) and Argentina (+78.5%) during the reporting period. The sharp increase in terms of value reflected increasing shrimp prices in the global market. Towards the end of June, shrimp prices also remained high mainly because of short supplies from Asian countries coupled with strong demand from other major markets.
Shrimp imports into the major EU markets increased with the exception of France and Denmark. Despite being hit hard by the current financial crisis, Spanish imports remained strong, with imports up by 44% year-on-year. Imports of frozen shrimp went up by 43%, while processed shrimp imports doubled in quantity during the period under review. China and Argentina were the top two suppliers and their shipments increased by 52% and 105% respectively this year. Ecuador and Thailand also managed to increase their exports sharply to Spain.
The UK market also posted significant growth, which can be attributed to the sharp increase (+19%) in imports of frozen shrimp, while processed products were marginally higher.
Similarly imports into Germany and Italy grew by 6.7% and 8% respectively. Viet Nam doubled its shipments this year and became the largest supplier, over-taking Thailand.
In the Italian market, Ecuador maintained its number one position but supplies fell by 2%, while imports from India and Argentina increased sharply by 38.5% and 27.3% during the reporting period.
Meanwhile, shrimp imports into France and Denmark posted a slight decline in volume, but were significantly up in value.
As a result of the drop in supply from Canada, overall shrimp imports into Denmark also showed a negative trend this year, though there was a sharp increase in supply from Greenland.
Russia-growing market for farmed shrimp
Russia is currently attracting a lot of attention from Asian packers. Even though initially there were a number of problems related to payment, over the years, good companies have moved in with serious business intentions. The popular tropical products are raw black tiger shrimp, peeled block, as well as IQF shrimp with a maximum glazing of 7%; the market pays better prices with good terms of payment.
Russia imported 18 447 tonnes of shrimp during January-March 2011, up 6.5% against the same period of last year. Canada commanded a 35% market share. The second largest supplier, China, sold 79% more this year, whereas imports from Viet Nam increased by 63%. Demand for farmed tropical shrimp is growing rapidly in the Russian market, which has grown to 20% at present compared with 5% in 2005.
For Asian countries, considering the supply situation, prices of black tiger shrimp are likely to remain firm for a while, whereas vannamei prices may stabilize with improved supplies from India and Thailand, but no major price drop is forecast. Low inventory in Japan will support imports at moderate rates. Shrimp consumption is expected to improve during the summer holiday season in July/August. The market continues to support imports of value-added products, particularly for the retail trade.
Since the earthquake and subsequent power rationing nationwide, raw seafood is generally avoided for home cooking and demand for ready-to-cook products or readymeals has increased.
In the USA the market is getting stronger as recession fears recede. Consumers are reacting very well and demand is increasing steadily in spite of high prices. In contrast, foreign supply will have trouble in meeting demand, particularly from Asia, as several disasters have affected harvests in major supplying countries such as Thailand and Viet Nam. India is becoming an important supplier because of the lack of raw material of its competitors and to the growing use of new technologies in their productions. Latin-American supplies are not compensating the Asian decrease in exports either as they are focusing on exports to the EU and Brazil. However, some analysts think that there will not be a serious shortage of shrimp but there will be pressure to keep prices high. Confirmation of these trends will only become apparent in the next quarter. The steady upward direction of the US market and the good summer demand should keep the market firm.