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December 8, 2014
The Shrimp Industry in the First Half of 2014
During the first half of 2014, the volume traded in the international shrimp market increased by 5-6 percent, compared with the same time period in 2013, mostly as a result of import growth in USA and East Asian markets. In terms of farmed shrimp production, positive trends have been posted so far in Ecuador, Indonesia, Vietnam and India, but supply shortfalls in Thailand, China and Mexico are higher than forecasted. As a result, the level of current supply is lower than the early-year forecast, which has kept shrimp prices stable in the global market.
In Asia, the seasonal peak of farmed shrimp was delayed due to hot/dry weather and the late arrival of monsoon season. Overall, supplies were low to moderate in the producing countries during the April-October period. Moreover, the aquaculture areas affected by EMS in Southeast Asia and Latin America have not been able to recover fully yet.
In Thailand, the main production period was delayed till August, with harvests mostly consisting of small sizes as farmers avoided a longer farming period. Therefore, the total production of shrimp in 2014 is likely be below 200,000 metric tons in Thailand, which is lower than the earlier forecast was 250,000 tons.
In Southern China, a strong typhoon hit shrimp farming areas in July, causing extensive damage to the hatcheries and farms. Hatcheries in Hainan lost thousands of brood stocks and postlarvae, with seed production in this area reduced by almost 50 percent, a significant negative impact to shrimp farming in the southern provinces. Subsequently, Penaeus vannamei supplies were limited from Hainan, Guangxi and Guangdong with rising ex-farm prices.
While EMS disease persists in affected areas in Viet Nam, new areas in the country have evolved for P. vannamei farming. Some farmers also moved away from rice to shrimp farming due to increased salinity in waters in the Mekong Delta.
These developments have given Viet Nam a recent boost in P. vannamei production. For giant tiger shrimp (P. monodon), production has declined marginally in Ca Mau and Bac Lew provinces, but increased by more than 15 percent in Kien Giang Province where some farmers have moved back to tigers because the price weakening of P. vannamei during the first quarter of the year.
The industry association in Viet Nam, VASEP, reported that total production of farmed shrimp through mid-August was 317,305 tons in which 152,035 tons were giant tiger shrimp. Frozen shrimp imports, both P. vannamei and P. monodon, continue to come into the country from Latin America and other Asian countries for export processing.
In India, P. vannamei production increased moderately while P. monodon production is on the decline. Until September, ex-farm prices continued an upward trend due to supply demand imbalance and good import demand from East Asia. The official forecast in India suggests that farmed shrimp production, dominated by P. vannamei, may increase by 10-20 percent during the current fiscal year (April 2014-March 2015). But production of P. monodon is likely to decline at the same rate as many farmers in the northeast aquaculture belt have moved to P. vannamei farming this year.
In Latin America, farmed shrimp production is generally good and stable, particularly in Ecuador, Honduras, Nicaragua and Peru. However, production continues to be lower in Mexico as a result of EMS. In a precautionary measure related to the EMS issue, Peru has suspended imports of shrimp from China, Thailand, Viet Nam, Malaysia, India and Mexico for the next year.
Landings from Capture Fisheries
USA domestic shrimp landings in August increased by 6.3 percent to 8 534 tons compared with the same month last year. However, cumulative landings for January-August were lower than last year’s at 26 924 tons.
Import and Export Trends
According to INFOFISH estimates, the volume import in global shrimp trade increased by 5-6 percent during January-June 2014 against the same period last year, with a firm and steady price trend. The top ten importers, namely the EU, the USA, Japan, Viet Nam, Republic of Korea, China, Hong Kong SAR, Mexico, Canada and Australia, bought a total of nearly 850,000 tons of shrimp during this period. The demand trend was mixed in these markets; imports declined in Japan, Hong Kong SAR and Canada, but remained positive in the others.
It is also interesting to note the trend in exports during this period, in which Ecuador was the top supplier, very closely followed by India. The average monthly exports from each of these countries were nearly 24 000 tons. The other leading exporters are Viet Nam, China, Indonesia and Thailand. Monthly exports from China and Indonesia were about 13,000 tones each. The export volume from Viet Nam is not officially reported, but it is known to be higher than China and Indonesia.
The Japanese market, the third largest shrimp market globally, continues to import less shrimp as a result of the yen devaluation beginning in December 2012. In late September 2014, the yen dropped to a six year low at yen 110 equal to $1.00 creating panic in the market. Prices have also started to move up in yen along the distribution chain, causing serious concern in the trade prior to the year-end high consumption season. Prices are expected to increase further by 10 percent due to this factor, which is a bad news for marketers in Japan. The import price of farmed shrimp has already increased by $3.00 per kg during the June-September period.
Total imports during the first half of the year were 28,200 tons below the same period last year. The market share of tropical shrimp has been increasingly taken over by the cheaper cold-water shrimp, particularly from Argentina and The Russian Federation. Imports of raw, frozen cold-water shrimp were 34 percent higher during this period at 17,037 tons, but the large decline in tropical shrimp (-23,491 tons) was not compensated for. The top five shrimp suppliers to Japan for the period were Viet Nam, Thailand, Indonesia, Argentina and China.
In this price sensitive market, supplies of value-added shrimp, generally exported by Thailand, Viet Nam and China, have also been affected. Until June, monthly imports of raw frozen shrimp remained below 10,000 tons impacting the cumulative volume during the first half of the year. Indeed, supplies declined by 22.6%, compared with the same period last year.
Within the domestic wholesale trade, shrimp prices have increased in Japan since July, while local inventories remain lower than compared with other years. In the retail trade, demand for farmed shrimp is bound to decline due to rising prices. Marketers are likely to promote the Argentinean seabob shrimp during the Christmas and New Year season.
Total shrimp supply in the USA market is up with continued growth expected. Despite falling production and exports from Thailand, imports continue to grow from other sources in Asia and Latin America. So far the situation has not had a serious impact on prices, which are still at historically high levels and stable, demonstrating that demand is in balance with supply.
This summer, demand was strong in both restaurants and in supermarkets primarily driven by consumer confidence, improved disposable income and employment opportunities. With an upward trending USA stock market and decreasing gasoline prices, middle to upper-class consumers, the primary markets for shrimp in the USA, have more disposable income.
During the first half of 2014, relatively large imports of shrimp from Indonesia (+34 percent), Ecuador (+19 percent) and Viet Nam (+77 percent) pushed the total import volume of shrimp into the USA 11 percent higher, compared with the same time period last year. Notably, supplies were up for all types of product groups, including shell-on/easy-peel, semi-processed and processed, contributing to a much higher percentage rise in the import value (+50 percent) that crossed $3 billion during the January-June period this year.
Although rising shrimp prices were given as the reason for this development, it is also this import growth that contributed to the hefty increase in value. Indonesia was the top supplier during this period; the average import price of Indonesian shrimp increased by 40 percent, which could be linked to higher volume imports of large sized shell-on/easy-peel shrimp (un/15 through 21/25) (+35 percent) and also all types of peeled shrimp (+40 percent). Similarly, imports of peeled shrimp (including peeled tail-on or PTO, butterfly-cut) were 70 percent and 30 percent higher from Viet Nam and Ecuador, respectively. The rise in Indian shrimp imports was moderate at 10 percent.
In August and September, the Department of Commerce upheld higher duty rates for Thai, Indian and Vietnamese shrimp exporters, which were preliminarily raised in March.
Import demand for shrimp remains selective in the EU. Asian processors are constantly asked to produce frozen products with 20-30 percent glaze though the market is unable to support high prices. There are more imports from Latin America, namely Ecuador, Nicaragua and Honduras due to the preferential tariff rates.
During the first half of 2014, shrimp imports into the EU from third countries (extra-EU imports) were almost 6 percent higher at 253,600 tons, compared with the same period last year. Ecuador, the top supplier, increased supply by 12.7 percent and had an 18.7 percent share in total imports. India was the second leading supplier with a 38 percent rise in exports. Imports from Indonesia also increased by 35 percent, while Thai exports dipped strongly by 55 percent following the withdrawal of GSP on Thai shrimp in the EU market beginning in January 2014.
Nicaragua and Honduras export shrimp at zero import duty to this market area, and thus increased supplies by 25 percent and 31 percent respectively during this period.
As a single import market, Spain and France were the lead importers followed by the UK, the Netherlands, Italy, Belgium and Germany.
In Spain, Ecuador continues to dominate the market with increased supply, while imports also increased from Argentina, Morocco and Nicaragua.
In France, overall imports declined with lower supply from Ecuador though imports increased from India, Viet Nam and Venezuela.
In Denmark, the reprocessing industries imported less during the first half of the year compared with the first half of 2013, but exported more when comparing the same time periods.
On 17 July, the EU and Ecuador signed a deal that will allow the country to join its Andean neighbors Peru and Columbia in its trade agreement with the EU. According to the European Commission, the terms of the new agreement go beyond the unilateral EU-GSP for which Ecuador is no longer eligible. However, it will allow Ecuador, the number one exporter of shrimp to the EU, to benefit from improved access for its main exports including fishery products to the EU markets.
The Russian Federation
The imposition of an import ban from EU to The Russian Federation will undoubtedly affect imports from this source, particularly for Denmark and Greenland. During January-April 2014, Russian shrimp imports from Denmark were over 2,000 tons. As an alternative source, Argentina has increased shrimp supplies to this market by 73 percent during this period at 534 tons and demand may increase this volume further.
The large shrimp importers in the Asian/Pacific region are Vietnam, China, Republic of Korea, Hong Kong SAR and Australia.
According to INFOFISH analysis, Vietnam is possibly the number one import market for farmed shrimp in the Asian/Pacific region with estimated imports of frozen shrimp for the first half of 2014 at 50,000 tons. Ecuador and India were the main suppliers with imports also increasing from Indonesia, Bangladesh and others. Most of these volumes are reprocessed for export markets.
China mainly imports for domestic consumption with supplies of both cold and warm-water shrimp increasing into the market during the first half of 2014, compared with the same period last year. This trend continued during July-September in order to procure supply for the Mid-Autumn festival held in early October. Industry sources indicate that actual import volumes, particularly from Vietnam and Myanmar, are much higher than official figures due to undocumented border trade.
The shortage of farmed shrimp supply, however, has affected Chinese exports during the reporting period.
Maldives has emerged as a niche market for its neighboring countries. Indeed, Indian shrimp exports to this destination were 133 tons during January-May 2014 and Sri Lanka exported 55 tones during January-June 2014. Maldives has a large tourism-base catering industry that requires shrimp, while demand from local consumers has also increased. Last year, Maldives imported more than 300 tones of shrimp from India and 89 tones from Sri Lanka.
In Asia, farmed shrimp production is likely to decrease in the coming months while the sector approaches the production season’s end. Industry reports from Thailand indicate less than 200,000 tons of production for 2014.
In Ecuador, shrimp producers are planning to increase production during the next harvesting season. However, the next season’s supply will not be in the market before March/April 2015.
Japan has become less attractive for P. vannamei exporters, while limited demand for P. monodon will continue to cater to the high-end market during the year-end festival season. For cold-water shrimp, Japanese importers will also have to compete with the import demand for Argentinean shrimp and the domestic market in The Russian Federation in the coming months.
There seems to be positive trend in the USA shrimp market and consumer demand is forecasted to increase from November through the New Year. Shrimp is likely to join the traditional turkey during the traditional Thanksgiving family dinners in November and also in Christmas and New Year celebrations. These are indications of a positive outlook in the coming months.
Source: Aquaculture Directory. International Shrimp Trade Grows, Supported Largely by Increased Imports by the US and East Asian Markets. December 8, 2014.
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