Shrimp Market Report as per 10 June 2011

Overview

 The U.S. shrimp market continues in a relatively quiet mode. Some prices for large RHSO whites have moved lower and a few sizes in medium and small RHSO from Latin America have been discounted, most likely in nervous anticipation of more production in the near future or simply a need to turn inventory in a very quiet market environment, reports http://www.megafishnet.com/ with reference to International Marketing Specialists.

Spot inventories remain very low while overseas prices remain high and firm complicating replacement efforts. Farmers and packers are facing higher production costs, higher fuel costs, higher feed costs and inflationary conditions. Moreover, a weak and growing weaker U.S. dollar is making exports to the U.S. more expensive. Recent pronouncements from Asian packers point to production problems resulting from unseasonable climatic problems and white spot virus in Vietnam and Indonesia. These conditions have created a bidding frenzy for the available inventory, particularly in the above two countries. Some plants are operating as low as 30% of capacity and this may lead to some plants shutting down if the raw material situation does not improve soon.

With every passing week, it is becoming more likely that the anticipated seasonal influx of product from Asian suppliers will be very late this year. If importers wait for the anticipated availability, say sometime in August/September, the demand to fill spot requirements as well as program business for retail and foodservice customers may actually push prices higher. This concern has caused a recent flurry of travel activity by U.S. importers to see what they could source. It has been reported that some importers have begun buying at higher levels to ensure they will have product for their customers. The apparent reasoning is that it is better to have product at today's high prices, than to run the risk of not filling their needs, at possibly even higher numbers down the road. This is not a prediction on our part but merely an observation of various strategies now in play.
Asian Production Situation

 In Thailand, packers have recently raised their prices, based on increasing production costs and increased demand. Some packers confirm they have received many inquiries from U.S. importers recently. One major packer told us that orders are coming in spotty and no big orders have been completed. It seems that everyone is waiting until August to see if there will be a big spike in demand and if this will push prices up higher.

In Indonesia, packers report an increase in orders from importers asking for medium to small white shrimp. However, the packer's prices have been very high and very few contracts have been consummated. Packers continue to struggle to fill outstanding orders.

In Vietnam, white spot disease has been confirmed in Soc Trang province, affecting both white shrimp and black tigers. Shortages of rawmat continue due to climate problems (rain and cold weather) and higher production costs. The electricity price has just increased 15%, gasoline has increased USD 0.93 per liter and aquafeed products are up 20% compared to last year. Finally, inflation has soared more than 5% in the first quarter of 2011.
 Some black tiger processors are working at half capacity due to a shortage of raw material mainly caused by white spot disease in the southern provinces. One major packer of black tiger shrimp said that it has been over 10 years since he has seen such a serious lack of raw material. The prediction is that the lack of raw material will continue until August.
Latin American Production Situation

 Central American packers are just starting their new harvest but so far, limited production has come to the U.S. Many packers say they will try to ship head on shrimp to Europe. The weak U.S. dollar provides the European buyers with a significant price advantage over U.S. buyers. Ecuador continues to ship head on shrimp to Europe while concentrating on value added EZPeel and raw P/D for the U.S. market. Little raw headless is showing up as U.S. buyers have been resistant to paying the high prices offered by Ecuadorian packers. Mexico looks like it may be a significant exporter to the U.S. this year after a disastrous season in 2011. So far, there have been no reports of recurring white spot virus. Most production of small sizes is going to the Mexican domestic market but as the shrimp continue to grow, exports to the U.S. will increase later this summer.