Two things are certain about the shrimp market: Early mortality syndrome is decimating production in Thailand and the countervailing duties (CVD) complaint will lead to tariffs against the largest foreign producers. What is uncertain is what will happen to prices.
EMS will cause a 30 to 35 percent drop in shrimp exports from Thailand to the United States this year, or a decline of between 120 million and 130 million pounds, says a top executive at a large shrimp importer. Despite that, and despite the uncertainty of what will come of the CVD case (a decision could expected before press time in May), the executive thinks prices are peaking now after rising USD 1 or higher per pound at the beginning of 2013.
“I think the market is at a peak now. There may be a few isolated sizes where there is strong demand and that may maintain these high prices or go even a little higher, but I think these prices have seen their run,” the executive said.
One buyer for an East Coast supermarket chain thinks prices are going to go even higher, and is watching the market closely.
“We will need shrimp and everyone will be in the same situation,” the retailer said, adding he still has shrimp under contract from an auction late last year. “We have enough shrimp at fantastic costs. This contracted shrimp will get us into August. I think we will see costs at least USD 1.50 per pound higher than this past year.”
Prices the first week of May were between USD 4 and USD 6.50 for shell-on, headless out of Asia, slightly higher for easy-peel. Prices for raw P&D, tail off ranged from USD 4.15 to more than USD 6.50, with prices for P&D tail-on running from USD 4.75 to USD 7.75.
A buyer for a national restaurant said his supplier contacted him in January and they went in at that time, buying enough 26-30s and 71-90s to last until the next harvest. “Our strategy is to review shrimp positions again in August, September and October in order to determine when to renew our position,” the restaurant buyer said. “Our pricing has remained the same year over year on 71-90 shrimp, and we’re slightly below last year on 26-30 shrimp.”
The shrimp executive said shipments that arrive after June 1 will be subject to countervailing duties, so anyone buying before then won’t really know what the price will be. But wait too long, with everyone else looking to replenish supplies, and there may not be enough to fill your order.
“The Walmarts, Krogers, Safeways, all those people are sharpening their knives and want to get in at the right time to buy, which they typically do in June, July and August,” the executive said. “We are seeing tremendous anxiety over potential problems and a lot of the big importers are telling their large buyers, ‘Don’t buy yet in large quantities because we think the market may be at risk sometime in mid-summer.’ But if you wait until the end of mid-summer to buy, you may not be able to get the total number of inventories you require due to less production.
“This has been one of the more difficult years in the global shrimp industry than I have ever seen,” said the exec.
