09 November, 2012 - India's shrimp exports to the United States are having a profound impact on the market, as buyers are being lured by lower prices compared to shrimp from Asia and Latin America, but also trying to balance those lower prices with what one distributor calls a perceived lack of quality.
India shipped more than 100 million pounds to the United States last year and is expected to ship 150 million pounds this year, but much of its product remains unsold in freezers, said an executive at one distributor.
"It's been a major problem. These guys are shipping shrimp like there's no tomorrow," the executive says. "The market is satiated with farm-raised shrimp. Demand is off a bit — it's hard to get one's hands around how much — but restaurants are having a hard time with low counts and a lot of the economic issues, consumer spending and lack of consumer confidence."
While Indian exports have helped to drive down prices, rising energy and shrimp feed costs are exerting upward price pressure. So where are shrimp prices headed?
"Who knows? That's a question nobody has an answer to," the executive said "There's too much big shrimp, too much big whites right now, and the market has been unsteady. I think we're probably going to see a little bounce and turnaround this fall and going into winter, simply because the market is oversold and it has some upside potential in it right now. But it doesn't eliminate the problem of the volume coming into here."
What is a problem for distributors and packers is a boon to retail and foodservice buyers. A buyer for one regional group of steak and seafood restaurants says he made his shrimp purchases in late summer, choosing to buy product from India for around USD 0.75 less a pound than other shrimp available at the time.
"I'm sitting good until next August at less than USD 10 a pound for U-10s. On the 16-20s, we picked head-off for less than USD 5, and that's a hell of a price," the buyer says, adding he used to buy more from the Gulf of Mexico. "I did for years and years, but if you're almost a buck away ... I switched to the stuff from India for the first time in like forever."
The shrimp market looks like it's starting to tighten, the buyer says. "Global demand for shrimp is down. In Japan, demand is down, even for the larger product," he said.
The executive tells a similar story, saying shrimp is backed up in warehouses, not just Indian shrimp. "Freezers are asking us to shift a lot of our product to secondary warehouses, at their cost, to make room for shipments coming into the ports," he said. "When we hear these reports we know there are problems in the inventory."
While India may benefit from lower-priced product now, the distribution executive says the country's shrimpers must decide whether they will become known for low-cost, lower-quality product, or whether they will upgrade to compete with Asian and Latin American producers.
"A lot of their product has been marginal in counts, in weights, in treatment with tripolyphosphates," he said. "People are buying at a sharp discount. We had offers this past summer out of India for 16-20s at USD 3.40 a pound, C&F delivered, duty paid if any. And we know of a few offers out there at USD 3.30, 21-25s at USD 3.25, 26-30s at USD 3. They are establishing themselves in the marketplace here but only as a priced item for a perceived marginal product."
