Published: November 5, 2012
Eva Tallaksen

Pangasius FarmersPangasius raw material prices could strengthen around February next year, or already by December, two Vietnamese players said.
The low raw material prices of recent months — lower than farmers’ production costs — have seen farmers reduce the amount of fish in their ponds.

This is already showing on prices, Anh Kiet of Hung Vuong Corporation, one of the largest producers, said.

“The situation changed this week. The prices of pangasius raw materials are on a trend to increase. There is not much fish in the ponds now so I think there will be a significant change at the end of November,” Kiet told Undercurrent News.

Adding to this is the fact that four Vietnamese pangasius producers — Hung Vuong, Vinh Hoan, NTACO and Vinh Quang — are now certified by the Aquaculture Stewardship Council, Kiet said.

As a result “the export quantity to the European market is growing steadily since October,” Kiet said.

Undercurrent could not reach the Vietnam Association of Seafood Exporters for details on latest export or production figures.

However the Vietnamese office of Siam Canadian, which packs and exports shrimp from Vietnam to the EU and North America, also said farmers had started reducing the number of fish in their ponds due to lower prices.

The raw material price has remained at a low level of VND 22,000 – VND 24,000 ($1,055 -$1,151) over the past two months. This is lower than production costs, which average VND 26-27,0000 ($1,247-$1,295), and so farmers have reduced farming or stocking, Siam Canadian said.

“This will affect the raw material price and supply in the next three to five months,” its Vietnamese office said in an email update.

The company expects the effect to be stronger around the Vietnamese new year (Feb. 10) next year, when domestic demand is usually at its strongest. “We will see more price pressure in February, on top of the domestic consumption during the Vietnamese new year.”

Pangasius is usually grown for six to eight months.

Kiet suggested farmers could have started reducing their volumes around June, when the price of fishmeal for pangasius started rising considerably due to hikes in soybean and wheat prices. Prices of soybean have “increased considerably from May, 2012 at $400 per metric ton around $700 in September and now around $620″.

The current situation has put huge pressure on packers and processors, who are expected to accumulate some inventory over the next few months as they wait for more favorable conditions, Siam Canadian said.

“According to a report from VASEP and Vietnamese custom, pangasius exports during the last eight months dropped 21%,” Siam Canadian said in its email update. Despite this, “packers still need to keep the factory in operation and workers have to be paid, they still continue processing and then keep finished product at the cold storage”.

The Vietnamese interest rate is at 15% and bankers view Vietnamese seafood factories as high risk, so they further tighten the credit, turning up the pressure and tightening cash supplies for the packers, the update said.

Strong prices in around the Vietnamese New Year should therefore also benefit processors. If the market does indeed strengthen around that time, Vietnamese packers will be able to move their stock again, Siam Canadian said.

Undercurrent News
Contact us for more formation:

Siam Canadian Group Frozen Seafood Exporters 

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