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Shrimp - November 2010

Crustaceans Economics +2 more

The general economic recovery led to brisk shrimp trading in the first half of 2010. Generally demand exceeded supply, and prices moved up sharply. Shrimp importers and traders in the main markets were unable to build up inventories, as the product moved quickly, reports Globefish, a unit of the FAO Fisheries Department responsible for information on international fish trade.

Shrimp prices recovered strongly

The general economic recovery led to brisk shrimp trading in the first half of 2010. Generally demand exceeded supply, and prices moved up sharply. Shrimp importers and traders in the main markets were unable to build up inventories, as the product moved quickly. All main markets reported increased imports in the first quarter of 2010. The weakening of the EUR impacted the world shrimp market in the second quarter, and more shrimp was aimed at the US and the Japanese market instead. The Gulf of Mexico oil spill resulted in very low US shrimp production, leading to more demand for imported shrimp. The news on lower supplies from Viet Nam, Indonesia and Bangladesh also made prices move upwards. Prices are likely to increase to some extent in the coming months to stabilize at a high level during the last part of the year.

Supply situation continues tight

Some major cultured shrimp producers reported declining production in 2010, following the negative trend experienced in 2009. Viet Nam, Bangladesh and Indonesia will again have lower outputs. The cold winter delayed Chinese shrimp farming significantly in the opening months of 2010. In the overall climate of low aquaculture production, Thailand seems to be the only main player with a good production outlook. This country will thus be able to expand its dominant position in the US market and become the main supplier also to the Japanese market.

Viet Nam reported lower shrimp production in 2010. Strong offer prices from packers in the Mekong Delta indicate persistently reduced supply of black tiger shrimp in that country. Vannamei farms in central provinces and black tiger shrimp farms in southern provinces were hit by the extremely hot weather (38° C), which has affected growth rates and caused disease problems.

Bangladesh will probably produce less shrimp in 2010 then in 2009, as supply shortage for black tiger shrimp is reported. Farms in several areas are affected by mass mortality of shrimp linked with inadequate pond preparation prior to pond stocking.

Indonesia’s vannamei farming sector is yet to recover fully from the disease crisis experienced in 2009; hence supplies remain low from this source. Supplies of black tiger shrimp are also lower than expected keeping raw material prices high in the place of origin.

Shrimp farms in Honduras were seriously affected by a tropical storm and subsequent heavy rains. The crop losses are estimated to have exceeded USD 1.5 million. Serious damage to roads is affecting access to the farms. Low salinity of the water, caused by heavy rainfall is another cause for concern for future crops. In Peru shrimp supply is estimated to be 15 per cent lower than in 2009 as many farmers did not stock their ponds because of low prices last year.

Japanese demand for shrimp is strong

This year, supermarkets in Japan were the major buyers of head-on black tiger shrimp during Spring sales. Demand was basically focused on two sizes: 30 and 35 pieces/kg. Japanese consumers preferred to eat at home rather than expensive dining out, thus restaurant demand was very limited.

Imports during January-March 2010 increased by 1.7 per cent compared with the corresponding period of last year. Figures obtained from the total Custom’s cleared quantity showed that the share of prepared and processed shrimp dropped to 25.4 per cent from 26.5 per cent in 2009, although imports of “sushi shrimp on rice”, mostly supplied by Thailand, surged significantly.

With a 68 per cent market share, Thailand, Viet Nam, Indonesia and China were the top shrimp suppliers to the Japanese market. Compared with the same period in last year, overall supply from Thailand also increased significantly to 17 600 tonnes (+31.5 per cent) followed by Viet Nam at 9 900 tonnes (+7.4 per cent). Imports from Indonesia and China fell.

The inventory situation in Japan was very tight for large sized shrimp in the second quarter of the year. The strong yen also supported the market. Import prices softened temporarily in April but firmed up from May onwards following the oil spill incident in the USA. Prices increased by USD 0.60/kg in June for all origins.

US shrimp prices soar due to oil spill

The Gulf of Mexico oil spill problem is overshadowing the US shrimp market. In normal years, US domestic shrimp production is relatively limited with regard to total US shrimp consumption, contributing about 10 per cent of total supply. The area affected by the oil supply represents some 6 per cent of total US shrimp consumption. However, domestic US shrimp production normally influences the price level in summer months, the main production period for US shrimp from the Gulf of Mexico. As a result of the oil spill, important fishing areas for shrimp have been closed, which means longer fishing trips for shrimp trawlers to reach areas where shrimp catching is permitted. Production will probably decline sharply. As a result, traders are very cautious with existing inventories.

In addition to lower domestic production, imports are also lower than in 2009. As a result of limited supply, prices are going up very quickly, as shown in the graph. Black tiger shrimp reported USD 1.10/lb higher prices in just two weeks in June 2010. These price hikes are based on limited supply and fear of the impact of the oil spill, rather than actual consumer demand. The US stock market is quite weak at the moment and the unemployment rate is increasing, resulting in overall poor consumer confidence.

US shrimp imports declined by 4 per cent in the first quarter of 2010, mainly owing to limited production in the main supplying countries, as mentioned above. Thus Thailand managed to expand its exports to the US market by 7 per cent, now representing 35 per cent of total US shrimp imports. In contrast, Indonesian shrimp exports declined by 30 per cent as a result of the disease problems experienced in this country.

Imports Shrimp (Frozen Raw) (1000 Tonnes)
Jan - Dec Jan - Mar
2008 2009 2007 2008 2009 2010
Thailand 24.9 32.1 4.1 4.4 5.5 9.0
Indonesia 37.4 34.8 8.1 8.3 8.5 7.5
Viet Nam 42.2 39.9 5.3 7.2 6.1 7.3
India 24.0 24.3 4.8 5.0 4.7 4.7
China 16.8 14.9 4.8 3.9 2.7 3.2
Russia 7.8 7.1 2.3 2.6 2.2 1.8
Malaysia 4.5 5.1 0.7 0.9 1.1 1.4
Canada 7.7 7.2 1.6 1.2 1.6 1.0
Myanmar 6.8 6.7 1.3 1.6 1.6 1.2
Greenland 5.6 6.5 1.1 0.9 2.3 0.9
Argentina 2.6 3.6 0.3 0.2 0.4 0.8
Bangladesh 3.1 2.4 0.6 0.8 0.8 0.7
Phillipines 3.5 4.0 0.8 0.6 0.7 0.6
Others 9.7 9.0 3.0 2.1 2.1 1.2
Total 196.6 197.6 38.8 39.7 40.3 41.3

Imports Shrimp: USA (1000 Tonnes)
Jan - Mar
2005 2006 2007 2008 2009 2010
Thailand 31.6 34.1 39.7 35.0 36.3 39.1
Indoesia 12.8 17.1 12.5 20.7 20.6 14.6
Ecudor 12.0 15.9 17.2 15.7 16.1 14.8
China 9.9 12.8 17.7 12.9 7.4 9.7
Viet Nam 10.5 8.3 5.9 8.6 6.6 6.3
Malaysia 2.9 4.4 4.6 7.1 2.9 4.8
Mexico 4.9 4.9 6.9 6.5 8.0 8.2
India 8.0 7.3 4.1 2.9 4.6 3.6
Bangladesh 2.0 3.4 3.1 2.8 2.6 1.2
Guyana 2.0 2.4 2.6 2.5 2.4 1.9
Venezuala 3.9 2.6 3.0 2.1 0.9 0.4
Peru 1.0 1.1 1.5 1.7 2.6 2.0
Others 10.8 10.3 7.3 5.3 5.1 4.3
Total 112.4 124.6 126.2 123.8 116.1 110.9
Growth in all European markets

All EU markets reported strong trade in the first half of 2010, with imports increasing in all main markets. The economic crisis seems to be declining, and all indicators show an improved shrimp trade, both for supermarkets and restaurant sales. In the last two months, however, the decline in the value of the EUR has slowed the overall positive development. Price hikes have dominated the market, and some consumer resistance is expected to materialize.

Spain continues to be the main importer of shrimp in the EU. Despite the economic crisis last year, imports were strong and continued to increase during the first half of 2010 by 10 per cent. Main suppliers to the Spanish market continued to be China and Argentina, while Thailand is increasing supply to this market, from a mere 200 tonnes to 1 200 tonnes. Further increases in shrimp imports are likely, even though prices are expected to go up further. Spanish traders of shrimp source the comodity worldwide, and are able to change quickly from one supplier to another. Prices offered by Spanish traders are generally competitive, making this country a good market for all shrimp producers world-wide. It is surprising, however, that coldwater shrimp is not playing any important role in this market.

UK shrimp imports grew by five per cent in 2009, with the cooked and peeled sector (C&P) being mainly responsible for the increase. In the first quarter of 2010, generally an off season for shrimp trade, UK shrimp imports grew further by a significant 10 per cent. In the C&P tropical sector suppliers increased their presence, while the traditional coldwater shrimp suppliers lost ground.

The product split in UK imports seems to be in the process of changing, as processed shrimp (mainly C&P) now accounts for more than 52 per cent of total imports, a trend which is continuing. Tropical shrimp is now entering the UK market in C&P form, a development which has mainly favoured Thai exporters.

With regard to price developments during 2009, it is significant that the value of C&P products went up, after years of continuous decline. It is also important to note that Thailand’s unit value of C&P shrimp is GBP 5.20/kg, or GBP 0.70-1.00/kg higher than coldwater shrimp prices. This shows that there is a margin for higher prices for the Pandalus borealis product as well. However, the exchange rate of the British currency in 2009 was, on average, lower than in 2008.

The German shrimp market grew substantially in 2009. Total imports reached a record high of 56 700 tonnes in 2009, 8 400 tonnes more than in 2008. The increase in shrimp imports by Germany is not surprising as the big supermarket chains are all now offering shrimp products, and the discount chains have also recently included shrimp in their product range. The upward trend continued in the first quarter of 2010, when imports increased by 17 per cent.

Thailand is the main supplier to the German market with 11 500 tonnes in 2009, followed by Viet Nam with 9 800 tonnes. Both countries expanded their exports considerably. Bangladesh managed to almost double its exports during 2009 to reach 6 500 tonnes. This country is exporting more value added frozen shrimp products such as easy peel shrimp and with sauces added to their shrimp products.

French shrimp imports were stable during the past seven years at between 101 000 to 108 000 tonnes. Frozen shimp are by far the main form of imports and in this category, frozen warmwater shrimp are most popular. The supply comes from Latin America (Ecuador is the main supplier of shrimp to the French market), India (strong growth in 2009) and Madagascar (some decline last year). The French market pays a premium for high quality shrimp, for example Madagascan shrimp is priced at EUR 8.28/kg, while the Indian shrimp price is around EUR 4.69/kg. Overall, the unit value of shrimp imports by France declined from EUR 5.09/kg in 2008 to EUR 4.84/kg in 2009. During the present year, however, prices have started to move up quite substantially.

Further price increases likely

In June, the appreciation of the yen helped Japanese importers to conclude some solid deals even at higher prices. Price increases in the international market, however, are not positive for Japanese traders as they are afraid to pass on the higher price to end consumers. Under the tight supply situation, Japanese importers are not in a position to dictate market prices either. Therefore, depending on the strength of the yen, sporadic import deals are expected to replenish stocks, at least for summer holiday sales.

The US shrimp market, which for such a long time had been driven by buyers’ interest, has now become a “sellers’ market”. Larger sizes of shrimp are in very short supply, with prices reaching the highest levels in two years. Importers and sellers of domestic shrimp, holding larger sizes, are expecting a further rise in price.

Countries of the EUR zone will have problems to stay competitive in the world market, in view of the declining value of the EUR with regard to the USD and the YEN. The impact might be strongest in the Spanish market, where the economic crisis is declining, but unemployment levels are extremely high now, and shrimp consumption is likely to be impacted. In addition, fewer tourists going to the Spanish resorts will result in lower demand for shrimp products.

On the other hand, the outlook for the UK shrimp market is quite positive this year. Higher prices are likely, and have materialized already during the opening months of 2010. The EUR crisis led to a stronger GBP, which should attract some additional supply, at least from Asian production. The promotion of coldwater shrimp products, tailored to meet customer demand, should encourage continued momentum in this important market.

December 2010