Higher shrimp prices are resulting in lower demand in the United States, but despite that, prices will remain elevated as seafood firms work to clear out inventory.
Even though farmers are being paid less to grow shrimp, resulting in lower stocking levels globally, prices U.S. retailers are offering to consumers are based off of what they paid months ago for the product, plus cold storage costs, which have risen as energy prices have grown due to the war in Ukraine, according to Charoen Pokphand Foods Executive Vice President Robins McIntosh, speaking at the National Fisheries Institute's Global Seafood Market Conference’s shrimp panel on Tuesday, 17 January.
“Production is really going to be based on prices offered in these [high-consumption] countries, which is going to be based on consumption patterns and cold storage inventories,” he said.
U.S. shrimp imports will decline in 2022 for the second straight year, but that’s not due to lack of overall seafood demand, according to Rich Products Consumer Brands Division Senior Vice President Shannon Gilreath.
Rather, rising prices hitting everyone involved in the shrimp supply chain, along with high-priced stockpiles accumulated through the Covid-related surge in demand in 2021, are hitting up against consumer price sensitivity.
“The processors, manufacturers, and others throughout the supply chain have really gotten squeezed through all of this, and its challenging to pass on all the costs that are being realized from the time they buy the shrimp, process, and deliver to the shelf,” Gilreath said. “Overall, not bad news for shrimp. The category is growing, it's healthy, and it's experienced significant growth through the pandemic.”
Gilreath noted breaded shrimp sales by volume were less sensitive to price fluctuations than unbreaded value-added shrimp in 2022. Sales of breaded shrimp were down as prices rose above USD 8.20 (EUR 7.65) per pound between January and April 2022, then rose as the price veered under USD 8.05 (EUR 7.50) through the summer months, then shrank again when the price created USD 8.00 (EUR 7.47) per pound again in September through December. Unbreaded value-added shrimp saw volumes sold decline steadily as the price rose from USD 6.60 (EUR 6.16) per pound in January 2022 to USD 7.40 (EUR 6.91) in December 2022.
Sales of shrimp trays/rings were less impacted by price increases, rising in December 2022 despite the average price hitting USD 9.00 (EUR 8.40), up from USD 8.10 (EUR 7.56) a month before.
Commodity shrimp bags saw sales drop through the first half of 2022 as prices rose from USD 8.25 (EUR 7.70) in January 2022 to USD 8.75 (EUR 8.17) in August 2022, then sales rose in January as the price dropped to USD 8.50 (EUR 7.93).
“Inventories are still high, and mostly people are sitting on more-expensive shrimp, and costs are still up,” Gilreath said. “There’s lingering impacts from a broad swathe of other input costs.”
Gilreath predicted a leveling off of prices through the middle of 2023, starting with the recommencement of promotional deals on shrimp products.
But McIntosh said there could once again be a shortage of shrimp if farmers don’t restock their farms soon, which he said would only happen if they can earn around USD 2.00 (EUR 1.87) per pound, which is currently not available for most farmers globally.
“I would say that we still probably have more supply than then consumption, consumption can go up if you reduce the prices, and then we'll need more supply,” McIntosh said.
Photo courtesy of Sorbis/Shutterstock
