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July 15, 2015

United States

Weak Demand for Shrimp


World production of farmed shrimp is up, and wholesale prices are down, but USA retailers have not passed the lower prices on to consumers, so demand is very week.


New York frozen wholesale prices, collected by the USA National Marine Fisheries Service, for Indonesian Penaeus vannamei, easy-peel, headless, shell-on, 41/50 count are $3.95 per pound, about what they were five weeks ago.  Looking back to this time last year, the same shrimp were selling for $5.15 a pound.


USA importers are said to have big inventories of shrimp and are holding off on the “big buy”, which usually comes in June or July.  The healthy level of USA inventories can be seen in the drop in imports for May 2015.  January to May imports are up 7% year-on-year, to 219,878 metric tons.  For May 2015, imports were down 3.2%.


One of Asia’s largest suppliers to the USA said, “I think the low prices are being 80% caused by weak demand and 20% by oversupply.  In previous years, even when the prices where very low, the USA would come in and buy.”


The picture is “100% demand driven”, said Marc Nussbaum, president of International Marketing Specialists, a USA importer.  “Many are waiting and some still have plenty of shrimp, but can’t wait much longer.  If you booked in Indonesia today, it won’t ship until the end of August, so you’re just getting it in for October.” ...I think most Christmas buying will be done in the next few weeks or right after Ramadan.”  Nussbaum thinks prices may have hit a bottom, for now.


“I think the problem is really lack of demand,” said Jim Gulkin, managing director of Siam Canadian Group, a Bangkok, Thailand-based frozen seafood supplier.  Gulkin said retailers are not trying to move volume.  They “just want to increase margin and don’t mind if they sell less.  ...Raw material prices in Thailand, Vietnam, India and Indonesia are currently too close to cost or even below cost, and that will definitely impact the quantities the farmers stock for the remainder of the year.  Look for tight supplies from September onwards.”


Don Berger, director of frozen products with USA-based CleanFish, said:  “Shortages due to early mortality syndrome prompted buyers to reduce their use of shrimp, thus reducing the demand.  Record prices inclined more farmers in non-affected areas to increase supply.  We now have record supply, even without Thailand’s full participation.  The most likely outcome is further reduction of prices by about 15-20%.  This will spur retail demand and incline restaurants to come back to shrimp.  We need a $3 [per pound] 26/30 to get this market moving.”


Another buyer said, “In my opinion, everyone seems to be harvesting smaller sizes—due to disease and early harvesting—and USA demand has always been for the bigger sizes.  This has taken the market by surprise, and I simply don’t think there is the same global demand for the smaller sizes.”  The general feeling from USA importers is everyone is working their way down in inventory—week by week—replenishing only what is sold, he said.


Source: ASEAN Seafood.  Weak Shrimp Demand, Not Supply, Seen as Main Cause of Low US Prices.  July 13, 2015.

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