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September 4 2015

Vietnam

Two Largest Farms See Improving Prices

 

During the summer of 2015, Vietnam’s two largest shrimp farmers and exporters—Minh Phu Seafood Corporation and Quoc Viet—experienced slow sales, but both expect the situation to improve as customers prepare for the end-of-year holidays.

 

Le Van Quang, Chairman of Minh Phu Seafood Corporation, said, “We are pushing production along with the export of the product inventory to ensure timely delivery.  Due to the raw shrimp prices falling below the cost price, some farmers have suspended their ponds (no stocking) since the middle of the year.  ...Therefore we are faced with a shortage of raw materials to fulfill the signed contract with our customers.  If the shortage does not go on, we are sure our export volume will be equal to or slightly higher than in 2014.”

 

In the USA market, buying prices have not yet increased, but the volume of orders has been increasing and other customers like the EU and Japan have also increased their orders, Quang said.  This move, along with the shortage of raw materials, is leading to a sharp increase in prices for value-added products.

 

Callan Novoselac, General Manager of Quoc Viet, probably the second-largest shrimp processor and exporter in the country, after Minh Phu, confirmed that his company was starting to see increased buying interest from his customers.  “Sales have been a little bit slow this year, and the holiday, end-of-year buying hasn’t started quite yet, so it’s a little later than normal,” he said.  “But interest...is picking up, we’re feeling more interest on a daily basis now.”

 

Vu Cong Mua, an account executive at Minh Phu, noted that in 2014, Indian Penaeus vannamei production increased some 20% year-on-year, and that hike in supply brought global prices down.

 

While Minh Phu and Quoc Viet are still waiting for orders to increase, shrimp prices have been edging upwards since April 2015.  In Thailand, for example, farm-gate prices for 80-count-per-kilogram, whole shrimp increased from $3.72 to $4.19 in July 2015.

 

In 2015, Vietnam’s shrimp sales to the EU are down by as much as 22%, compared to 2014, while sales to the USA are almost half of what they were in 2014, and Japan has dropped imports from all its suppliers, as it struggles with a weak yen.

 

Nguyen Bich, a shrimp expert with the Vietnam Association of Seafood Exporters and Producers (VASEP), warned that the short-term outlook was tough.  “Companies have told me that production costs are some 70% of the sales price at the moment.  And prices can’t go up because they’re already $1 to $2 higher than Indonesia and India—so we’re being out-competed on that,” she said.

 

A concern for Minh Phu is the sharp rise in the value of the Vietnamese dong against Indonesia’s rupiah and India’s rupee.  “We are concerned about price competition with Indonesia and India....  Vietnam’s dong has gone up sharply in value compared to those currencies,” said Minh Phu’s Le Van Quang.  “To compete with other countries in the region, especially Indonesia and India, Minh Phu in particular and Vietnam companies in general, will struggle.  ...Vietnam needs to build a farm process of shrimps with lower costs—$1.50 to $2.00 per kilo...for 100 count—and also has to increase production of value-added products and other high-valued products....”

 

Source: Undercurrent News [eight free news reads every month].  Editor, Tom Seaman (undercurrent@undercurrentnews.com).  Two Largest Vietnamese Shrimp Firms See 2015 Sales Picking Up.  Neil Ramsden (neil.ramsden@undercurrentnews.com).  September 4, 2015.

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