A drop in production of frozen tilapia from China and fresh product from Central America will keep supplies tight for the rest of the year. This could impact prices going forward, said a top executive with one U.S.-based supplier.
China dominates the frozen market in the United States with about 90 percent of the volume, while Indonesia can claim about 8 percent of the U.S. frozen market. But China’s production declined 8 percent in November compared to the same month in 2012, which translated to about 22.5 million fewer pounds of frozen fillets available for 2013, the executive said.
“We believe this shortfall is due to several reasons, including the increase of costs in China, and some producers abandoning tilapia due to lack of profitability,” the executive said. Other reports have cited poor weather as a reason for a decline in output. “Because of this, the frozen market has been tight during the last few months, and it will probably stay like that for the rest of this year.”
A report at the Global Aquaculture's Alliance GOAL conference in Paris last fall said production out of China could fall further this year and next, meaning no significant relief should be expected soon. Production in China was estimated in 2013 at around 1.3 million metric tons. Some of this shortfall could be made up by Indonesia, Vietnam and the Philippines, all of which are expected to increase output in 2014 and 2015, the report said.
Prices for frozen fillets, individually vacuum packed, have been holding steady the past few months at between USD 2.50 (EUR 1.85) and USD 2.90 (EUR 2.15) a pound. On the fresh side, boneless and skinless fillets have been fetching between USD 4 (EUR 2.97) and USD 4.35 (EUR 3.22) a pound since late November.
“Due to the extreme shortages in the market there has been a lot of pressure to ramp up volume, which equates to a lot of additional costs in labor and overtime,” said a buyer for an East Coast supermarket chain. “Marketplace demand has grown, which has put pressure on production. These factors have pushed costs up. Our costs have jumped from USD 4.05 (EUR 3) to USD 4.25 (EUR 3.15) a month or so ago and now our supplier wants to push the cost another USD 0.11 (EUR 0.08) to USD 4.36 (EUR 3.23) per pound.”
There was a significant reduction in fresh production in Ecuador last year and, to a lesser extent, Costa Rica, with Ecuador also reducing its exports from more than 340,000 pounds a week in November 2012 to around 135,000 pounds in November 2013, the executive said.
Costa Rica cut exports from 300,000 pounds in August and September to around 200,000 pounds in November. “This means the high season of this year, from January to April, is going to be very short on product, as Ecuador and Costa Rica won’t be able to supply the increased demand of their customers during the Lenten months,” the executive said.
The reduction in exports from Ecuador was due to some producers shifting from tilapia to shrimp production due to very high shrimp prices. Costa Rica production declined due to water availability issues.
The reductions in these markets have been offset to some degree by shipments from Mexico, the buyer added. “Based on what I am hearing regarding supply, Costa Rica will improve and Honduras will increase another 10 percent and Mexico will grow 100 percent in 2014,” he said. “Since Lent will be short of product, it looks like promotions will have to wait until after. With Mexico increasing, we will be in a great position to help drive sales.”
