Experts in the global shrimp industry have said that the global supply of shrimp is expected to increase significantly this year, but it is still unknown where the increased shrimp production will go.
Some suppliers are scrambling to keep up in as demand in key global markets reaches unprecedented levels, and farmers in major shrimp producing countries are looking to significantly increase production as shrimp prices soar in. Shrimp production could increase by as much as 10 percent this year, driven by Ecuador, Indonesia, India and Vietnam, according to estimates from Thailand (Charoen Pokphand Foods) and other industry experts.
So, which market is likely to fill up with the extra shrimp this year? Some analysts believe that the most likely candidate is the Chinese market.
“It’s impossible to say when the Chinese restaurant industry will recover, but what is certain is that when it recovers, you will see a huge rebound, because China is a traditional seafood consumption country, and the foodservice market is huge. Therefore, China expects to be the biggest beneficiary of the huge increase in shrimp production this year, especially once China starts to relax the current ultra-strict import measures. A large amount of shrimp will flow to China. The one country most affected by the Chinese market is Ecuador. Since 2020 Ecuadorian exporters have turned to value-added shrimp production since China’s shrimp imports fell sharply. But I don’t think Ecuador’s value-added shrimp products can really shake up Asian value-added shrimp, or to the point of replacing it. However, Ecuador’s value-added shrimp can reduce the impact of Asian value-added shrimp to a certain extent. But I think Ecuador still needs to mainly focus on Head-on shell-on shrimp, once the Chinese market is willing to pay higher prices, China will re-emerge as their largest export market, and they will not continue to sell lower prices to the United States.” An industry expert declared.
The demand for shrimp has been temporarily hit by the COVID-19. But even if Ecuadorian shrimp exports to China reach the level before pandemic, the country could maintain a foothold in other markets.
We expect an overall price decline of 5%-10% in 2022. Of course, the market demand still exists, and it is still very strong, and the price will drop a little, but it will not be too much, and it will not reduce the enthusiasm of farmers to put baby shrimp.
At present, shrimp prices are in a relatively high factor, which is supported by high freight rates.
Shipping rates for containers in some places are now down around 10% from a high point of $28,000 to $24,000, but still a huge gap from pre-pandemic costs ($4,000).
“Freight rates are high and it won’t last forever, eventually the supply of containers and ships will be able to meet the demand because it’s just a normal business balance. But it won’t settle in the next few months, it’s likely to take a year. If freight rates drop, then the price of shrimp may drop.”