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July 16, 2015

The World

The Supply-Demand Situation

 

Daniel Gruenberg (seagardenfoods@mac.com), a shrimp-farming consultant in Thailand, reports on the Shrimp List:

 

I think the recent Shrimp News article significantly mis-characterizes the current supply-demand situation and needs further elaboration.

 

1. There is a time lag between price signals and adjustments on supply.  While it is true that increased prices due to EMS caused non-affected countries to increase production.  I don’t think I could name a single country that is not facing production problems right now.  India has running mortality syndrome (RMS), and Indonesia is facing slow growth issues and unexplained mortalities.  Thailand is facing RMS in the Eastern Region, and I believe I am seeing it in the South as well.  Malaysia and Vietnam continue to struggle.  All the major shrimp producing countries in Latin America have production/disease issues.

 

2. In Thailand the price situation is unusual.  There is little increase in prices for animals over 70-count-per-kilo because production of larger shrimp is unstable and processors will not risk making contracts for larger sizes.  Therefore, when the packers see farmers who happened to get lucky and get a large size, there is not any value for the large sizes, so the industry is stuck in a rut of producing unneeded smaller sized shrimp.  Since EMS hit, I believe this can be said for most countries.

 

3. Please remember that we are not just dealing with one disease, we have EHP, WSSV, RMS and EMS that are continuing to challenge farmers all over the world, and this trend is only getting worse.  We are not “recovering” as we have been promised countless times in the last three years.  I may be wrong, but I challenge fellow Listers to name one major shrimp-farming country that has the possibility of producing more shrimp in 2015 than it produced in 2014.  Inflated government projections, based on wishful thinking, don’t count.

 

4. Buyers play an important role in this complex game and I think all the talk about “over-supply” is just plain wrong.  Farmers need to stabilize the production of the large shrimp that the market demands and buyers want.  This will lead to the production of even more large shrimp.  With buyers sitting on the sidelines, gambling for a low price spot to start buying, they are only making the situation worse for their own future.

 

Source: The Shrimp List (a mailing list for shrimp farmers).  Subject: Shrimp Prices.  July 15, 2015.

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