By: Paul B. Brown Jr.*
Pangasius and Channel Catfish: Traders of both pangasius and Chinese catfish have reported mixed sentiments due to the uncertainty that new regulations may cause. At the moment, the market appears to be at a stand-still.
Imported Channel Catfish: December imports increased from the previous month as historically seasonal data would suggest. Still, YTD imports are well below last year’s figures by about 28 percent. Supplies in the U.S. to that point had been reported as tight with high replacement costs.
Replacement costs came in at $3.32 in December, which is the highest level since March 2012. Because of this, as well as in addition to the costs incurred to clear shipments into the U.S., offering levels in the U.S. have been pushed to near record at $3.80 on average. Finally, adding the uncertainty surrounding the new upcoming regulations, the undertone is mixed going forward.
Pangasius: December imports decreased slightly compared to the previous month and the same month a year ago. 2015 monthly imports did not reveal any seasonal pattern but total yearly imports reached a record high at 237 million pounds. Despite record high imports and a relatively weak market going into the fourth quarter of 2015, product holders have mixed opinions as to what the future will entail. As a result, anecdotal reports indicated replacement offerings surged in early February —which could be reflected in future arrivals— as a result offerings in the U.S. also surged slightly.
European data in November —the most updated data available— revealed that imports of pangasius to the EU (both on a monthly and YTD basis) surpassed those of the U.S. again. Whether or not new inspection rules in the U.S. will divert pangasius shipments to other markets, say Europe, is yet to be seen; however, it is a likely scenario. That said, when comparing import prices, product entering the U.S. came in at a much higher price level than in the EU.
Tilapia Whole Fish: Imports of frozen whole fish increased compared to the previous month and the same month a year ago. As a result, total imports into the U.S. ended 3.5 percent above last year’s figures but below imports in 2013.
Tilapia Fresh Fillets: Monthly imports in December followed the historical and seasonal trend and jumped up from the previous month. However, at roughly 4 million pounds, December 2015 marks the lowest monthly figure for that month since December 2010. From a seasonal point of view, changes in monthly imports were less drastic from April to October but sudden drops from their peak in March, and in November were greater than the three year-average. Now, total imports in 2015 added 55.1 million pounds, which is the lowest yearly figure since 2011. Shipments from top suppliers Honduras and Mexico were down 10 and 35 percent respectively when compared to last year. Imports from Colombia, now the second largest supplier of this commodity, almost reached the 12 million pound mark on a YTD basis which translates into a 31 percent increase from a year ago. Former top supplier Ecuador continues to recover with shipments up 17 percent YTD from a year ago. Costa Rica, the third largest supplier, was down 5 percent on a YTD basis from a year ago.
Market prices adjusted downward during March and have remained barely steady ever since. A seasonally soft demand explains the bearish undertone in the market. December replacement costs rose slightly after falling significantly throughout the year. Still, this replacement figure for December is the second lowest figure since June 2012.
Tilapia Frozen Fillets: December imports increased from the previous month as historical and seasonal data suggests. However, 8 out of the last 9 months, monthly imports have fallen below last year’s levels and the 3-year average. This translates into total imports in 2015 falling to the lowest level since 2011 at 347.5 million pounds. Additionally, replacement prices have also adjusted lower, with the exception of October and November, which increased but only slightly. In December, replacement costs remained flat from October. This market remains generally mixed with a barely steady undertone. According to Chinese reports, production in 2015 dropped, which would suggest higher prices, everything else equal. One of the explanations could lie on reports suggesting packers in China did not have the expected orders amid lower production; as a result, offering levels from China trended down.
Recent reports of bad weather in China, combined with a seasonally low production period, could impact the market in the short term. Still, more information will become available once New Year’s festivities in China are over. For now, the market is mixed.
December 2015 shrimp imports were up over 14% compared to December last year. So for the year 2015 compared to 2014 imports were 3.3% ahead.
However, the value of the total imports as expressed in dollars per pound dropped 21% from $5.34 in 2014 to $4.21 for 2015. Shrimp imports to the US market were the second highest ever on record in 2015 at 1.29 billion pounds. The figure was just 8.9 million pounds short of hitting the all-time high set in 2006.
Imports from most producing countries are way up in December compared to the same period a year ago. Ecuador is down and Indonesia is up only slightly. Shell-on imports for December are up 1.8% for the month and 1% for the year. Peeled imports were up over 20% in December but finish the year only 1.5% higher.
Cooked imports were up over 26% in December and are 7.3% higher for the year. Breaded imports posted substantial gains both for the month and for the year.
India was the top shrimp supplier to the US market again in 2015 increasing year end imports by 24.9%. Despite flooding and some reports of disease Indian imports in December were huge. HLSO imports increased 14% for December compared to a year ago in count sizes 31-40 count and larger and centered on 16-20 and 21-25 count. Peeled imports increased 70.9% for the month.
Lower imports and production due to the flooding, disease issues, and lower stocking densities due to previously weak market conditions are anticipated; by some, to show up in early 2016 imports.
The widely reported flooding issues appears to have been the main catalyst in the market strength seen in December. From the low in November 2015 on 16-20 count HLSO of $5.20 the market has increased 17.3% to currently $6.10. Of course this strength is multi-faceted and stems from ALL the issues mentioned above.
Currently the Asian shrimp market is mostly steady but some premiums continue particularly on 26-30 count and larger sizes. Additionally, some report holes in inventories as well as difficulty replacing product due to the disconnect between replacement offerings and the current US spot market. However, currently the situation has eased somewhat with reports of additional raw material deliveries to Indian plants and a few increasing offers. This could be enough to match the slower US demand typical in the first quarter and currently indicates a steady market.
Indonesia was the second largest supplier of shrimp to the US market in 2015 with annual imports up 10.7%. HLSO imports from Indonesia were down 31.1% in December and are generally considered mostly easy peel shrimp. Peeled imports were up 5.8% and cooked imports were 138.4% higher.
Although the cooked percentage increase is very high, Indonesia is a significantly smaller supplier of cooked shrimp when compared to Thailand and Vietnam and ranks third.
US imports from Indonesia typically are heaviest from October through to about March or April. Dry conditions due to a strong El Niño are blamed for poor production and the anticipated shortfall in imports in the first quarter. Without rain, salinity is higher in the ponds and that limits shrimp growth.
Like India replacement offerings from Indonesia have been reported strong and disconnected from the current US spot market.
The figure 1 show the green condition in October 2014 followed by the same period in 2015. The dry conditions are readily noticeable. October would generally be the beginning of seasonal production.
*President of Urner Barry