[title element=’h2′ color=’fff700′]Raw material shortage drives further increase in Indian shrimp prices : January 5, 2015[/title]
Prices for Indian shrimp raw material are firming fast on a tighter than usual supply picture, despite a weak demand.
Sources are presenting a bearish picture on demand in the US, Europe and Japan at the start of 2015, with buying also not as strong as last year for the February Chinese New Year celebrations.
Despite this, supply driven factors, some down to the normal drop in raw material production at this time of the year and some down to weaker than expected second season production, are causing prices to rise again in India.
The decline in annual Thai shrimp production from 600,000 metric tons to 650,000t a year to around 200,000t in 2014, caused by the impact of early mortality syndrome (EMS), has seen India emerge as a major producer of vannamei. Thailand has lost market share because of EMS and India, along with Ecuador, Vietnam and Indonesia, has gained.
For 2014, sources expect around 300,000t of vannamei and 20,000t of black tiger to be produced by India, compared to around 250,000t of vannamei and 30,000t of back tiger in 2013. The outlook for 2015 is for further increases.
Despite the big increases in Indian production in 2014, there is a seasonal production shortage of raw material at the moment, which has been causing prices to firm, something sources expect to continue throughout January.
The second Indian season has been less productive this year, said a source with one Indian processor, based in Andhra Pradesh.
“Generally, in the second season of stocking we are getting 40-50% success, but this year it was less than 20% and in volume terms there is a shortage of 30,000-40,000t,” he told Undercurrent News.
The landing of vannamei in India has come down drastically and the price has increased INR 10/kg in each size, except 40 count, where the increase is INR 20 (see below), said Chaipat Kunapiwatkul, business development manager with Siam Canadian Group.
“There has been a rebound on Indian shrimp prices, especially on vannamei, over the past two weeks, but the recent rise in pricing should mainly be attributed to the supply side, instead of the demand for Chinese New Year,” he said.
“It’s expected that the situation will persist until the middle of January. Then we have to see whether there would be any sign of improvement in global demand. If the market appears to pick up, the price is likely to move up to some extent as a result,” Kunapiwatkul told Undercurrent.
“Raw material availability is depleting day-by-day. There won’t be any raw material after January and the new stocking is also delayed, due to disease problems,” the Andhra Pradesh-based source said.
“Farmers are waiting for a conducive environment and that will be only after January. So, the next arrivals will only be after April,” he told Undercurrent.
It will be tough start to the year, said the source. “All farmers are stocking in the same period and there will be huge demand for seed and the seed price will reach its peak,” he said. “Harvesting will be from May-June and, due to heavy arrivals, the raw material price will crash.”
Prices may be on the rise, but they are still historically very low, lower by 22-24% compared to same time last year, said an executive with an Indian shrimp firm selling big volumes to the US.
These low prices are seeing some packers buy, as they feel the bottom has been reached, he said. On the market side, demand is still slow.
“I don’t have confirmed information that enquiries are getting better. I think we should be able to see better trends on the market direction by the next week or two. I personally think prices have reached a bottom for now and would probably stabilize around these or slightly higher levels,” he said.
Although this source said the global markets are slow, overall, he said there are a few enquiries coming up from Thailand, Vietnam and China.
“There is also news some enquiries coming up from some US buyers this week. Some packers are also speculating that prices can’t get any lower as they see buying interest coming from other markets,” he said.