Shrimp prices appear to have reached a tipping point, with reports of some restaurant chains in the United States and the U.K. choosing to pull shrimp from their menus until prices come down to levels they are comfortable paying or passing the increase on to their customers.
With early mortality syndrome (EMS) decimating harvests in Thailand, the world’s largest shrimp-farming country, prices remain at near-historic highs, although prices in early October were down slightly in some categories from where they were in the last week of September, possibly due to the U.S. decision to dismiss countervailing duties against China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam.
“There’s no recovery that we can see around the corner; we just don’t see any kind of a quick solution. Prices are still very high, and in many cases the price and cost exceeds the selling levels here,” said a top executive at a U.S.-based shrimp supplier. “There has been a teeny bit of leveling off since the duties were knocked out. There’s a tiny bit of softness but only because they stopped going up, so the end user invariably thinks that if they’re not going up they must be ready to come down. I don’t agree with that.”
Said one buyer for a U.S. restaurant chain: “The shrimp market is a mess. Securing inventory is a major challenge. Outlook is poor and likely not to improve for six to nine months.”
Prices for shell-on, headless, easy-peel white shrimp out of Asia in early October was in the low-USD 5 (EUR 3.75) range for smaller sizes to over USD 8.50 (EUR 6.37) a pound for 21-25s. Peeled tail-off product was in the mid-USD 5s to over USD 9 (EUR 6.74) a pound, while tail-on shrimp were in the mid-USD 6 (EUR 4.50) range for 41-50s to more than USD 10 (EUR 7.49) for 13-15s. For some perspective, 31-40s were selling in the USD 5 range two years ago, USD 2 (EUR 1.50) less than now, while 16-20s now selling at more than USD 9 were USD 3 (EUR 2.25) cheaper at this time last year.
With prices at these levels, some chains are deciding it’s not worth having shrimp on the menu. At the Global Aquaculture Alliance’s GOAL meeting in Paris, suppliers were talking about customers abandoning shrimp until prices drop. Those that are buying are doing so cautiously. “If I were to buy at today’s prices in Asia and sell that shrimp at today’s prices in the United States, it would be a marginal profit, a break-even or a marginal loss,” the U.S. shrimp supplier said.
“Short term, we really can’t push things a lot higher, the market just isn’t allowing it. We’ve seen some end users change their sizes, move down a size, try to save some costs,” he added. “Foodservice can absorb things a little better than retail. We haven’t seen a big change in foodservice pricing yet, but eventually, at some point, shrimp won’t be a value and people will look at putting other things on the menu.”
The supplier, who normally buys Thai shrimp, turned to Indonesia and India for product, and though growers in those countries have stepped up production, they can’t make up for the steep declines in Thailand.
“The light at the end of the tunnel is likely to occur sometime in the first quarter. I have to believe consumption for the holidays will be somewhat muted because of the high prices,” the executive said. “Supermarkets, in a 2-pound bag of shrimp, they’re going to have between USD 4 (EUR 3) and USD 6 in higher costs than they did last year. You start putting that at retail up USD 6 to USD 9 and it’s going to have an effect on consumption.”
