Rabobank: Shrimp industry flailing as global demand softens

Falling prices and demand coupled with rising feed and production costs have left global shrimp producers in dire straits, according to new analysis published by the global animal protein sector of Utrecht, Netherlands-based Rabobank.

Written by Rabobank Senior Global Specialist of Seafood Gorjan Nikolik, the report, “Global Aquaculture Update 2H 2023: Between a Rock and a Hard Place,” found the shrimp industry faced an extremely challenging first six months of 2023, with prices continuing to fall due to soft demand from Western markets in tandem with high supply from leading producers like Ecuador.

At the moment, it’s hard to say how long the low prices will last, Nikolik told SeafoodSource. He said an anticipated drop in supply in the second half of the year is “only part of the equation.” The main issue is that retail prices have yet to decline significantly, he said.

“When that happens, we can expect a demand improvement. This is needed for inventories to be used up and eventually for wholesale prices to improve,” he said. “I cannot speculate how long this can take, but it will probably be in 2024.”

Calling 2023 “a year to forget” so far for the shrimp industry, the report suggests the demand slump may get worse in the second half of 2023 as Chinese demand levels out. China imported record amounts of shrimp in anticipation of strong demand after it dropped its zero-Covid policy in November 2022, but demand didn’t recover as quickly as expected, resulting in low prices and high inventories.

Nikolik said shrimp sales have been hurt by a slowdown in the Chinese economy due to macroeconomic factors, including high unemployment among younger generations, high local government debt, and a real estate industry crisis.

“All of this is leading to falling demand for many products, including food,” he said. “China is, in fact, [experiencing] deflation at the moment, [and] until some government stimulus packages are announced, there will not be any change in the near term.”

Asia’s shrimp industry as a whole is entering what could be its most challenging period since the outbreak of early mortality syndrome (EMS) in 2011, according to Rabobank.

“The supply contraction that started in H1 2023 is likely to continue and, at least for India, accelerate, as virtually the entire industry is operating at a loss per kilogram sold,” Nikolik said.

India’s shrimp production is likely to decrease by 20 percent in the second half of this year, Rabobank found, and volumes out of Vietnam and Indonesia are also likely to contract.

Ecuadorian producers can also expect a difficult rest of the year, too, not just because of weaker Chinese demand …

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