Shrimp harvests in key production regions are generally up this year, which could offset production problems in China and meet its need to import "major volumes", according to Undercurrent News industry sources.
At the shrimp panel at the Global Seafood Market Conference held in the US in January, it was predicted Chinese production would continue to drop in 2017, with a slow growth in overall global output.
According to the panel, which gave a far lower forecast than the level given at the 2016 Global Outlook in Aquaculture Leadership (GOAL) conference in September, total global production would increase around 1% in 2017 to around 2.8 million metric tons. Data presented at GOAL had forecast a more bullish scenario with record output in 2017, and a further increase in shrimp production in 2018.
According to Jim Gulkin, CEO and founder of Bangkok-based Siam Canadian Group, which has operations in the region, in both Vietnam and Thailand production is currently up, while Indonesian prices are also competitive.
Thai production may be up “10% over 2016”, he told Undercurrent two weeks ago, despite lower production than predicted earlier in the year.
"I would say Thailand had a slighter under performance in the first half,” said another source based in Thailand, who did not wish to be quoted by name. “But the stockings have been very aggressive in the last couple of months. Thailand could fulfill the projection. But if not up 10%, maybe up a little bit.”
In Vietnam, although the country still needs to import from India and other Asian countries, production is also “better than 2016”, said Gulkin. Meanwhile, in Indonesia, despite the country also still struggling with disease, prices are “competitive compared with other Asia origins”.
“They [Indonesia] are expanding into a lot of new areas," said the second source in Thailand. "So those new areas are where the growth is coming in Indonesia.... I would guess that the older areas [in Indonesia] are still burned out and that's where we hear about problems."
In India -- where in the past 18 months or so the US has upped its sourcing of shrimp compared with other regions -- shrimp harvests are also “currently high”, said Gulkin. In recent weeks Indian farmgate prices have fallen to a two-year low, as a result of a spike in harvesting.
Meanwhile, in Ecuador -- South America's largest shrimp producing country -- this year's production is expected to be 10% higher, the same increase as in Thailand.
“Ecuador is up 10%,” said the other Thailand source. “And I will say, I'm surprised because we still hear about continued problems in the hatcheries." He put this down in part to more nurseries turned into ponds and increased use of autofeeders, which has improved efficiency.
"But we've got to be getting close to the upper limit [of production]," adding that next year the country could maybe “squeeze another 5% increase in output”.
Stable-to-rising production in Southeast Asia, India and Ecuador comes amid problems with China's harvest, though. "The first crop mostly failed," said Gulkin. "I'm not sure how the second crop will do. It seems China cannot get its aquaculture problems sorted out."
Last month shrimp farmgate prices in South China were 10-15% higher than the same month in 2016, Undercurrent reported, after the region was blighted again by outbreaks of shrimp disease.
Demand higher than last year
Relative production stability in Southeast Asia, India and Ecuador comes amid increased demand from the US, while European sales are also picking up, said Gulkin. “Big [US] buys are happening now. It has been busy for 3-4 weeks. US market seems buoyant -- expect good consumption."
Europe is also "better than last year", he said. "Sales are picking up to some degree although still not where it should be.”
The other Thailand source, though, reckoned that China is outbidding US buyers in the market. “The Chinese pay a lot more. I mean, look at the price that they're paying,” he said.
Longer-term, the Thailand source reckoned global production would not be able to balance the drop in China's own shrimp production and its increasing demand.
“I still take the world view that production in the world is not improving. And I take the view that China plays a pivotal role in how the markets will react and they've got a population that will pay a higher price.
“So if they produce less.... that can only mean that the prices are going to go up.”
Trade volumes, wholesale prices
Recent global import volumes of shrimp appear stable, though. According to International Trade Center (ITC), global import volumes of shrimp in the first quarter of 2017 were level compared with the same quarter in 2016, while import prices were only marginally higher.
Countries imported 0.34% less shrimp (HS Code 030617) in the first quarter of Q1 compared with Q1 of 2016, said ITC. Importantly, these figures do not include shrimp imports by China and Vietnam, however, because of incomplete data, nor cold-water pandalus shrimp imports.
While these imports were level, import values increased 3.6% y-o-y, according to ITC. Again, this excludes shrimp imports by Vietnam, China, and imports of cold-water pandalus shrimp.
The slight increase in import values mirrors a similar increase in wholesale shrimp prices in the US.
In week 27, wholesale prices were up 1-6% in the US for Indonesian, Indian and Thai shrimp, headless, shell-on (HLSO), compared with the same week last year, according to Undercurrent's prices dashboard.
In week 27, Thai, HLSO, 26/30 were $4.70 per kilogram (up 5.6% y-o-y); Indonesian shrimp, HSO, 26/30, $4.65/kg (up 4.5%); and Indian shrimp, HLSO, 26/30, $4.70/kg (up 1%).