Global shrimp prices are stabilizing at “unfavorably low levels,” pushing many farmers into loss-making situations.
Raw vannamei exports from India were pulling in an average of USD 6.32 (EUR 5.80) per kilo in September, down from USD 7.54 (EUR 6.92) in September 2022 and from USD 6.55 (EUR 6.01) in July 2023 – but up slightly from the USD 6.29 (EUR 5.77) it pulled in in August 2023, according to Shrimp Insights Founder Willem van der Pijl.
As inflation has cooled, the U.S. market has been warming up, importing more shrimp year over year in August and September. But the Chinese market has been tepid, with economic problems including stalled real estate development, defaulting developers and falling home prices contributing to lower demand.
China’s reported GDP growth was 5.2 percent for September, slightly ahead of projections. Looking forward, however, the International Monetary Fund's November World Economic Report cut its expectations for Chinese growth, noting China's troubled property sector poses a risk to both the domestic economy and the commodity exporters that rely on Chinese demand. And the Chinese government has thus far been slow to add to the country’s debt pile by announcing fiscal stimulus packages aimed at lifting growth.
China Aquatic Producers Promotion and Marketing Association (CAPPMA) Secretary General Cui He said China is currently facing an oversupply of vannemei shrimp, and that customers of Chinese processors have been working off large inventories.
“They bought big volumes last year,” Cui told SeafoodSource.
Chinese New Year, coming up in February 2024, could provide a boost, but Roda International – a global shrimp distributor headquartered in Las Palmas, Spain which operates VannameiTips – warned against bullish prognostications of Chinese demand.
“The future trend of shrimp prices, especially considering the decreased buying interest from China, is complex,” it said. “While a drop in demand typically signals potential price decreases, current market dynamics – marked by environmental factors, shifts in production, and low price levels – suggest a wide range of possible outcomes.”
Prices are “quite low,” pushing many farmers into a loss-making situation, according to Roda International.
“Vannamei shrimp consumption has been experiencing a slowdown in the market, and this trend has been affecting prices. Several factors, such as overproduction, inflation, and consumption patterns may have contributed to this situation. Producers and exporters have been faced with significant challenges in adapting to these new dynamics,” it said.
Adding to those challenges is the forecast of an extended El Niño, which could impact production in Ecuador due to heavy rainfall resulting in disruptions in farming. That, combined with farmers holding back on their production intentionally until prices come back up, “could play a role in maintaining or even slightly increasing prices,” Roda International said.
“In the past several weeks, the vannamei shrimp market has witnessed a notable downward trend in prices, eventually stabilizing in the last two weeks. This stability raises a crucial question: have we reached the price floor?” it said.
Roda International noted a shift in market preference for headless, shell-on (HLSO) shrimp over head-on, shell-on (HOSO) shrimp.
“This preference stems from the straightforward nature of HLSO transactions, where pricing is more predictable and not as heavily dependent on the varying quality grades found in HOSO sales,” it said. “Additionally, the harvesting and processing for HLSO are simpler, making it a more attractive option for farmers under the present market conditions.”
In a review of China’s 2023 shrimp imports, the company noted a recent shift favoring Indian exports, with Ecuador’s share of the Chinese market dropping below 70 percent in September for the first time in the year. India has picked up market share by offering more black tiger shrimp, according to Roda International.
“The reasons for the strong increase are mainly motivated by the consumption of black tiger prawn and the lack of this type of product from other origins that traditionally exported greater quantities to China, such as Vietnam,” it said. “Increase in demand for Indian shrimp is not focused on one region but is being distributed across several regions in China.”
Shrimp Insights found black tiger shrimp (P. monodon) exports, which have accounted for 5 percent of India’s shrimp exports by value in 2023, up from 2 percent in 2022 and 1 percent in 2021, are up 91 percent in 2023 through September, though they have fluctuated wildly by quarter. The value of India’s black tiger shrimp exports was up 161 percent year on year in Q1 2023, but dropped 115 percent year over year in Q2 2023, and rose 55 percent in Q3 2023.
Overall, India’s shrimp exports are up 2 percent by value thus far 2023 compared to the same time period last year, including a 6 percent jump in Q3 2023, though its exports by volume are down 2 percent for the year.
“Of course, the unexpectedly large export volume comes at the cost of low prices, but at least prices seem to have stabilized at the end of Q3,” van der Pijl wrote in a Shrimp Insights email update.
He noted India’s value-added shrimp exports are down in 2023, now accounting for 9 percent of India’s total shrimp exports in 2023, having represented 11 percent of the total in 2022.
Photo courtesy of Claire Lucia/Shutterstock
