Shrimp markets very slow 

The economic crisis continues to influence the world shrimp market. Generally, because of their relatively high price, sales of shrimp products suffer because of loss of purchasing power. This means that fewer consumers eat out at restaurants, the main outlets for shrimp purchases in the major shrimp consuming countries. Prices are low at the moment, and there is little hope of price increases later this year. Availability is generally very good from shrimp supplying countries but shrinking demand is creating a serious problem for the whole sector and particularly to producers, who see their costs increasing and their income being dramatically reduced.

Shrimp aquaculture production declines for first time in history

 Overall production of farmed shrimp in Thailand dropped 15% during January-March 2009 compared with the same period last year. According to the country’s Shrimp Farmers Association, this year’s production may come down to 392 000 tonnes compared with 490 000 tonnes harvested last year. The production cut will be greater for Penaeus vannamei, compared with the black tiger shrimp. Black tiger shrimp farms in Bangladesh and India have been seriously damaged by the cyclone Aila and production there has been virtually wiped out.

Discouraged by the falling prices of shrimp in the export markets, black tiger shrimp production has been scaled down in the southern provinces of Viet Nam. Conversely, there is a surge in the farming of vannamei shrimp in the southern provinces. This year vannameiproduction, introduced just last year, may reach 100 000 tonnes in Viet Nam.

Japanese traders careful

The cherry blossom season in spring initiated outdoor eating in Japan and shrimp business improved in the catering trade during April-May. However, as price control is exercised carefully to avoid consumer backlash, the catering and retail trade have moved to make cheaper products available to end consumers. Subsequently, demand for large sized shrimp did not improve much during the Golden Week festival compared with the previous years. The festival demand for extra-large sizes was disappointing for the catering trade.

Compared with last year, total imports of shrimp increased during January-March 2009. Total shrimp imports into Japan reached 56 400 tonnes in this period, which compares with 54 800 tonnes last year. The main product group was frozen raw shrimp with about 40 000 tonnes. The main suppliers of this product are Indonesia, Viet Nam and Thailand. Viet Nam reported substantial declines in shipments, while Indonesia and Thailand managed to increase their frozen shrimp exports to the Japanese market in the first quarter of 2009.

For home cooking, young consumers prefer semi-processed and processed shrimp, Western style; they even prefer cooked shrimp over tempura shrimp. The older generation still likes the traditional shell-on shrimp but in easy-to-prepare and ready-to-cook preparations.  Demand for tray-pack shrimp, of all types, has been very slow in the retail trade. 

The H1N1 flu alarm has created mixed trends in the market. Because of the health scare, people are avoiding going out, which is hurting the already weak restaurant trade. Many schools have cancelled the outdoor programmes that normally take place in summer. Overall, shrimp consumption is low in Japan during the current summer months, a normal feature for this time of the year.

Low demand for shrimp in the USA continues

The negative economic environment in the USA has affected consumer habits. One of the most significant changes is an increase in savings rate, as a reaction to the uncertainty in the labour market. This implies a reduction in consumption as consumers are becoming more price-sensitive. As a reaction to fewer customers, restaurants are increasingly offering value-oriented items on their menus, in order to attract guests. Many restaurants are offering smaller sized menus, often based on shrimp, in order to reduce costs and therefore prices.

Low demand for shrimp, in conjunction with high cold storage holdings, has impacted both prices and imports. Sales of larger sizes have been dramatically affected by the change in consumer buying patterns. Prices of US domestic shrimp are significantly lower than a year ago, and the same trend, although less severe, can be observed with imported shrimp.

US imports of shrimp in the first quarter of 2009 totalled 115 000 tonnes worth USD 795.2 million. These figures represent a 7% and 8% drop in total imports in terms of volume and value respectively compared with the same period in 2008. The main supplier, Thailand, which accounted for 31% of total imported volume, managed to gain market share. However, Thai exporters expressed their concern about the effect that the strengthening baht could have on shrimp exports.  Exports from Indonesia remained unchanged while purchases from Ecuador and Mexico increased.

There was little incentive to fish for pink shrimp on the US West coast, as both fishermen and packers were disappointed by current wholesale prices. The few landings were totally taken up by the local fresh seafood market. In addition, there still are substantial stocks of frozen shrimp from the 2008 season. As for the Gulf of Mexico area, the white shrimp season in Louisiana started on 18 May 2009. Preliminary data showed a higher percentage of larger sizes.

The EU shrimp market is worsening

During the first quarter of 2009, all major key markets in Europe continued to see their shrimp imports decrease further and total import figures were down 3% compared with the same period last year to 154 500 tonnes. Demand has decreased on the various European markets although prices are steady at a fairly low level and therefore more affordable.

The new economic outlook released by OECD in June this year shows that the euro area is in a deep recession, “with external demand collapsing and domestic demand being weakened by tight financial conditions, rising unemployment and heightened uncertainty”.

In general, because of their relatively high price, sales of shrimp products suffer during an economic crisis because consumers have lower purchasing power and they tend to be more careful regarding the quality of the product. Aware of this, advertisers in the retail sector develop product labels referring to quality and sustainability: “So organic”, “be good to yourself”, “reduced fat”, “Omega 3”, “best ever prawns”, etc....

Even with the difficult situation on the European market, during the first quarter of 2009 India noticeably increased its market share in this region with a 24% growth rate compared with last year figures. With 15 200 tonnes of shrimp exported to Europe during the period January-March 2009, India is presently the largest shrimp supplier to EU. However, this leading position may not last, as EU inspectors have found unauthorized residues in some products imported from India. Crustaceans of this origin will now enter the European Union only on presentation of negative results for nitrofurans and other unauthorized residues.

Greenland’s export figures to Europe were also relatively good during the period under review with 14 700 tonnes corresponding to a 23% increase compared with 2008. Greenland is the second major shrimp supplier to Europe and the number one supplier of coldwater shrimp. Almost all the production goes to Denmark through a large state-controlled group and then is re-exported to other countries. In June, the new Greenland government provided help for the group which is presently facing severe financial difficulties.

The situation is difficult for most shrimp suppliers. Ecuador, after years of constant expansion on the European market, is showing signs of weakness.  It is the third shrimp exporter to Europe with 11 900 tonnes but lost 11% on last years’ shrimp exports. However, it remains by far the main supplier to the French and Italian markets thanks to its low-cost products.

Argentina reported very good landings of Pleoticus muelleri, but had to sell at discounted prices due to diminished demand. During the first quarter of 2009 Canada experienced an 11% decrease in exports to the EU with only 8 700 tonnes. Coldwater shrimp processors are shutting down in Newfoundland as a consequence of the decreasing demand and a strong Canadian dollar.

Bangladesh registered a very positive result at the beginning of 2009 on the UK market, with a 26% increase of its exports. Unfortunately, the future is very uncertain for this country after the cyclone Aila destroyed thousands of shrimp enclosures and ponds on 25 May and also as a re-sult of the voluntary six-month suspension of exports following the detection by the EU of harmful veterinary drug residues in shrimp from Bangladesh.

OECD reports that the financial crisis in the UK is severely restraining business and household spending. Latest UK statistics indicate that during the first quarter of 2009, total shrimp imports decreased by 5% in volume compared with the same period in 2008, though in terms of value imports increased by 20% compared with 2008. However, the decrease in import volume did not affect all products. The average unit value for shrimp products entering the UK market was GBP 1.00/kg higher than during the first quarter of 2008. The devaluation of the British Pound is the main cause and the situation should change somewhat in the coming months as the UK currency slowly recovered in the second quarter. While imports of frozen shrimp products continued to decline owing to the economic crisis, losing 13% compared with last year figures, volumes of prepared and preserved shrimp increased notably (+5% compared with 2008). This is because of increased volumes in processed products coming from Asia (mainly Thailand and Indonesia). The proportion of coldwater shrimp imported by the UK market continued to shrink and now represents only 35% of total imports in the first quarter of 2009. In contrast, imports of warmwater shrimp have been stable for the past four years, including 2009 in spite of present difficulties.

Total Danish shrimp imports continue to follow the downward trend of previous years. Imports during the first quarter of 2009 amounted to 22 800 tonnes corresponding to a total of DKK 608 million, a 10% decrease in volume and a 22% decrease in value compared with the same period of 2008. Denmark imports essentially coldwater shrimp (95% in the first quarter of 2009). This does not come as a surprise, as Denmark is mainly a re-exporter and processor of coldwater shrimp. Greenland, by far the number one supplier to Denmark, saw its exports to this country increase by 23% in volume and by 20% in value compared with the first quarter of 2008. In contrast, during the first quarter of 2009, due to problemas expereinced with low shrimp catches, Canada suffered a 41% decrease in volume and a 49% decrease in value compared with the same period last year.

Spain registered the largest drop ever in shrimp imports during the first quarter of 2009. With 22 000 tonnes imported at a value of EUR 104 million, Spainish imports decreased by 15% in volume and 14% in value compared with the previous year. Chinese and Ecuadorian shrimp imports, which together represent 35% of total imports, dropped drastically. On the other hand, Argentina supplied large quantities of Pleoticus muelleri (almost double the volume of last year) to the Spanish market as a consequence of very good landings.

Shrimp volumes imported by France during the first quarter of 2009 were 11% lower in volume and 3% lower in value compared with the same period last year, thus increasing the unit value. THis was mainly due to a change in the composition of shrimp suppliers to the French market.  Demand continues to be mainly for frozen whole tropical shrimp while coldwater imports represent only about 15% of the market. Almost all top exporting countries have seen their volumes to France decrease substantially.

Only Asian countries (India, Thailand and Viet Nam) are gaining market shares on the French market. India, in particular, registered a constant expansion on the French market in the past five years and, notwithstanding the economic crisis, increased its volumes to France, at the beginning of this year, by more than 40% compared with last year’s figures.

In Italy, total shrimp imports for the first quarter of 2009 decreased by 10% in volume and by 3% in value compared with the same period last year. Consequently the average unit value increased by EUR 0.40/kilo compared with 2008, making shrimp less affordable in a market where revenues are badly hit by recession. OECD indicates that the Italian economy is in a strong recession, mainly because of external developments linked to the global financial crisis. Unemployment and budget deficit are expected to increase further with negative  consequences for household consumption and subsequently for more expensive food commodities such as shrimp.

Germany is the only country in Europe to register a positive shrimp import figure in 2009. The increase is particularly apparent for frozen whole products of Asian origin. Shrimp demand in Germany has continued to expand during the past 10 years. The majority of imports are in whole frozen form but the proportion of processed products is significant and growing. Products of Asian origin dominate the German market and imports from Thailand, Viet Nam, India and Bangladesh (top four suppliers) represent 60% of total imports.

Outlook bleak

The deterioration in availability of -credit and lower consumer demand in the USA will continue to slow down the recovery of the economy.  The rest of this year will probably be hard for the shrimp industry. With substantial carryover of shrimp inventories from late 2008 imports, it will take considerable consumption during the summer to re-balance shrimp supply with demand.

In the coming months, supplies of semi-processed and processed Penaeus vannamei from Thailand to the Japanese market are expected to increase compared with shell-on products. Market demand for 21/25 and smaller counts of black tiger shrimp will persist into the second half of the year. Overall, the Japanese market seems to be the strongest among the main shrimp markets, helped by a strong yen. However, it will be unable to counterbalance the negative results in Europe and the USA.

Shrimp consumption in Europe may increase somewhat in the coming months, as expected during the summer season, with tourists influencing demand for seafood. However, fewer visitors are likely to take vacations in European holiday areas, and demand may be lower than usual. As a result prices should stay below last summer’s levels.