US Shrimp Market Report

August 23, 2011 11:05

The U.S. shrimp market continues along at a slow, steady pace. There are indications that this trend will continue well into the fall months. Any anticipated, across-the-board drop in prices at the end of summer should not materialize. Part of this is due to increased production costs and a weaker U.S. dollar, resulting in shorter inventory for the spot market, reports with reference IMS.

Most importers are very light in their inventory positions due to the continuing disconnect between the high overseas prices and the prevailing prices in the market place. One would think that the weak global economy would drive demand and prices down but significant economic forces pushing on the supply side are keeping prices up. The exception to this may come later this fall when large white shrimp in the 16/20 and 21/25 categories start arriving from Indian, Asian and Mexican sources. Many farmers have been leaving their shrimp in the ponds to obtain higher prices. There has been very little incentive to grow and harvest 31/40 and smaller sizes and what little product that has been available has been going into value added product forms. The anticipated influx of large whites on top of a firm mid range (31/40 and down) market will likely cause a price compression bringing these two converging size ranges closer to each other.

Asian Supply Situation

In Thailand, raw material prices dropped in early August and then went right back up. Current offer prices are not workable for the U.S market except for the retail and foodservice program buyers that have been willing to buy at or near current levels. Many of these buyers simply could not wait for packer prices to come down. If they were going to have product in time for the holidays, they needed to step up and negotiate the best prices they could for their requirements. These purchases have helped farmers and packers maintain firm prices during the summer months.
The Thailand Ministry of Commerce has revised Thailand's shrimp exports down by 8% for 2011 due to global economic problems. The decline in volume stemmed mainly from lower consumption in Japan in the wake of the March 11 earthquake and tsunami, as well as the sluggish EU and American markets. A stronger baht against the U.S. dollar will cost shrimp exporters approximately 6-7 million baht in revenue this year. Recently, the baht edged up to 29.80 to the U.S dollar.

In Indonesia, the raw material supply is quite stable with the majority of the available supply falling into the 26/30 and 31/40 sizes. Most packers have not been willing to buy much inventory as it is difficult to match overseas asking prices. Furthermore, the weak U.S. dollar (buys Rp 8,562) is causing exporters problems and most expect the Rupiah to strengthen further due to the recurring financial crisis in the U.S. Many packers are starting to slow down their production as they approach the Moslem New Year holiday from August 27 to September 5.

In Vietnam, shrimp farmers in the Mekong Delta have suffered unprecedented losses of shrimp this past spring. The Ministry of Agriculture and rural development estimates that total losses in the country's 17 tiger and white shrimp producing provinces totaled over 53,000 ha. They are now just beginning cultivation after 3 months of inactivity. Shrimp prices remain high and processing facilities have been facing a severe shortage of raw materials. Ca Mau's 36 shrimp processing factories have been operating at less than 50% of capacity due to the shortage of raw material. Insiders are predicting that the shortage will last into September and October. Seasonal rains with some anticipated flooding in the middle of the country will prevent farmers from leaving their crops in the ponds to obtain larger sizes. The expected natural assortment will be 26/30 abt 10%, 31/40 -41/50 abt 60%, 51/60 abt 20% and 61/70-71/90 abt .10%

The Latin American Supply Situation

In Ecuador, production continues steady but prices remain firm. There are reports of continuing sales to China, in head on form. Europe has been very quiet this summer but European buyers are starting to show interest in Head on shrimp for the holidays. This interest will gradually increase from September through November.
There are a number of reports indicating growing direct sales to U.S. distributors and wholesalers, bypassing sales through traditional importer channels. While this is not a new phenomenon, it does explain continuing exports to the U.S. while at the same time traditional importers complain that they cannot buy much from Ecuador because of very high prices.

In Mexico, packers are producing mostly 31/35 and 36/40. Smaller sizes harvested over the last two months have been going to the domestic Mexican market. There have been a number of "emergency" harvests as evidence of white spot disease has been found in some ponds and has forced farmers to harvest to avoid the potential of a mortality wipeout as they experienced last year. It appears that Mexico may not be a big exporter of 16/20 HLSO this year, but there should be abundant 21/25 and 26/30 this fall.

In Central America, most farms have been harvested and there is not much to report on.

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