Vannamei's Heyday

By

Steven Hedlund

Published on
August 25, 2008

As consumers savor what's left of summer, shrimp buyers are already preparing for the hectic winter holiday season. And, to their relief, prices of Penaeus vannamei, the darling of the global shrimp aquaculture industry, have finally leveled off after a three-month run-up.

Pacific white shrimp prices have shot up roughly 20 percent since early spring. For example, shell-on, head-off Asian-raised 36-40s fetched nearly $3 a pound in mid-April. By mid-July, they commanded upward of $3.50.

The price run-up was a result of rising production costs, triggered by soaring fuel costs, a challenge every food production industry has faced over the past year or so.

However, another factor was at play: Many Asian farmers opted about a year ago to shift vannamei production to large shrimp -- 26-30s, 21-25s and 16-20s -- because, they claimed, medium and small shrimp are no longer profitable. But that led to a shortage of 36-40s and smaller shrimp, which, along with higher production costs, drove up vannamei prices, explains one shrimp industry veteran. The run-up peaked in mid- to late July, as demand weakened and inventories accumulated.

"The anomaly in this situation is the continuing disconnect between supply-side prices and U.S. market prices," says the industry veteran. "As prices continue to drop here, the overseas producers will have to adjust their offering prices or sit on product. Basically, what we're now witnessing is a classic market correction that was inevitable."

The good news for shrimp buyers is vannamei prices are expected to edge down during the traditionally lethargic September-to-October selling period before stabilizing for the busy winter holiday season. The bad news is they aren't projected to reach pre-April levels, as production costs remain high.

Let's not forget, the U.S. shrimp market is still largely supply driven. The good thing is consumers worldwide are getting accustomed to increasing food prices, which is softening the blow of climbing vannamei prices.

Best regards,
Steven Hedlund
Associate Editor
SeaFood Business

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