A dip in Chinese shrimp exports is helping to prop up pricing in Malaysia, according to a producer there.
Prices for tiger prawns are down 16 percent from two years ago, but are still enough to make a profit, according to Benjamin Saw, CEO of shrimp producer Arus Nagamas Private Ltd., which is based in the Kota Kuala Mudah region.
“[Prices] are still relatively good, as our margins are still around 50 percent,” Saw said.
Fears over importing Chinese shrimp is working in favor of smaller producers, according to Saw.
“Prices are still strong in Malaysia due to the worry about coronavirus infection of imported Chinese prawns, as China is the biggest farmer and producer of prawns in the world and at a very cheap price,” Saw said. “That is why maybe the demand for Malaysian prawns is looking good, during this period of fear of doing trade with China.”
Demand from South Korea is slower due to stockpiling, but Saw’s other buyers who exports to Singapore, China, and Japan are still purchasing a lot of product, Saw said.
“Buyers lately prefer small-sized prawns, which are 40 pieces per kilogram and above, as Korea has ceased taking prawns bigger that 40 pieces, according to one of my suppliers,” he said.
Hedging by traders is also helping to stabilize shrimp pricing, according to Saw.
“Many buyers in Malaysia, who are packaging factories and exporters, do consider prawns as a commodity and trade them actively like stock traders,” he said. “A lot of them also have their own farms, packaging factories, storage facilities, and export companies. When prices are bad, they buy a lot and store them and when prices recover, they sell at the highest possible price to maximize their export margins. The ability to store prawns unlike us farmers does greatly impact a company’s ability to capitalize on price fluctuations. This is why I believe prices in Malaysia are still strong.”
The coronavirus outbreak has spread fear of doing trade with China, Saw said. As a result, neighboring countries are opting for Malaysian prawns instead of Chinese prawns.
“Although demand in China is big, the trade ecosystem in Asia is very complex, with many of our supplies exporting to numerous countries,” he said. I believe, despite the coronavirus fears and China importing less prawns, the micro market is still rather robust and smaller countries can still sustain each other’s demands and supplies.”
Photo courtesy of Izlan Somai/Shutterstock
