An appreciating dollar is giving U.S. shrimp buyers an edge over their European counterparts in an increasingly competitive global shrimp market. But that's not to say sourcing shrimp will be a walk in the park for the remainder of 2010.
Quite the contrary: Though one industry veteran describes shrimp-trading activity as "very dull" right now, supplies have tightened and prices have increased over the past 60 days. The price hike — more than USD 1 a pound on some sizes — was triggered by Gulf processors and wholesalers, who turned to imports to fill their short-term needs in the wake of the Gulf of Mexico oil disaster. But prices remain high, and buyers are worried that they'll stay high.
"The frenzied buying over the last 60-plus days created some considerable inventory build-up at the wholesale level, causing many companies to shift from buying to selling to lock in profits. This falloff in buying activity has been the major reason for the quiet market conditions we are seeing now. Notwithstanding, overall spot inventories are still light," said one industry veteran.
"U.S. importers facing growing out-of-stock situations and numerous reports of lower production estimates from Asian packers began sourcing aggressively in May and June," he added. "This buying competition for the available inventory pushed already high overseas prices to even higher levels."
In fact, U.S. shrimp imports have dropped in 10 of the last 11 months, according to the latest figures from the National Marine Fisheries Service. Through the first five months of 2010, shrimp imports were down 5 percent, to just under 400 million pounds.
Indonesia's battle against the infectious myonecrosis virus (IMNV) is taking a big bite out of availability. U.S. shrimp imports from Indonesia — the United States' No. 2 shrimp supplier last year — were down more than 30 percent, to 53 million pounds, through May.
"The one major problem [in Indonesia] has been the continuing presence of [IMNV] that has affected over half of [the country's] shrimp-growing area," said the industry veteran. "It is very possible that Indonesia's year-end exports [to the United States] may drop below 100 million pounds, well below the 2009 figure of 153 million pounds."
Indonesia announced this month that it's stepping up its efforts to control the spread of IMNV, including reducing pond-stocking density from 200 larvae per square meter to 100 larvae. One Indonesian shrimp producer has only 30 percent of its ponds in operation due to IMNV.
However, U.S. shrimp imports from Thailand, by far the No. 1 shrimp supplier to the United States last year, were up more than 13 percent, to just over 142 million pounds, through May. Though Thailand's shrimp-farming industry is growing at a healthy rate, it isn't without its short-term production difficulties due to Mother Nature.
"Unusually hot weather with heavy rain has not provided a good environment for growing shrimp [in Southeast Asia]. In Thailand, several packers have reported that the weather has cooled down, that water salinity has dropped and farmers are clearing their ponds for a new crop. However, it will be at least September or October before these crops can be harvested and up to two months before they can be packed, shipped and delivered to overseas buyers," said the industry veteran. "Large sizes will be short and packers are reluctant to conclude any contracts of these sizes. All agree that weather conditions have disrupted the normal supply pattern and it is not safe to say that it is back to normal."
This week, head-on, shell-off Asian-raised Pacific whites are quoted in the high-USD 6 range for 16-20s, high-USD 5 range for 21-25s, mid-USD 4 range for 26-30s, high-USD 3 to low-USD 4 range for 31-35s and mid- to high-USD 3 range for 36-40s.
