VASEP: Shrimp exports will bounce back

According to the latest statistics from the Vietnam Association of Seafood Exporters and Producers (VASEP), the lower than expected figures led to an overall 16% drop to US$2.99 billion in aquatic exports for the six-month period.

US importers are said to have large inventories of frozen shrimp and are holding off on the ‘big buy’ for the year-end holidays, which usually comes in June or July report several executives in the global shrimp market.

Marc Nussbaum, president of International Marketing Specialists, a US importer says the picture is ‘100% demand driven’ and that many US importers still have plenty of shrimp, but can’t wait much longer.

Nussbaum told Undercurrent News that most US importers will have to start buying soon to have adequate inventories of frozen shrimp for the Thanksgiving and Christmas holiday season later this year.

World production of farmed shrimp is up, and wholesale prices are down, but US retailers have not passed the lower prices on to consumers, so demand in the US is very weak reports Shrimp News International.

“I think the problem is really lack of demand,” said Jim Gulkin, managing director of Siam Canadian Group a frozen seafood supplier based out of Bangkok, Thailand.

Gulkin said retailers are not trying to move volume.  They just want to increase (profit) margin and don’t mind if they sell less. 

Raw material prices in Thailand, Vietnam, India and Indonesia are currently close to cost or even below cost and that will definitely impact the quantities the farmers stock for the remainder of the year. Look for tight supplies from September onwards, Gulkin said.

Deputy General Director of Vietnam’s General Fisheries Department Nguyen Huy Dien in turn echoed the perspective that the weak demand is attributable to a global shrimp oversupply and resultant lower price.

Consequently, VASEP has revised its annual forecast for shrimp exports downwards by 17% to US$3.2 billion in gross revenue in 2015.

Secretary General of VASEP Truong Dinh Hoe remains optimistic and reports there are still positive signs for the shrimp market throughout the remainder of the year.

The shrimp output of major competitors such as India, Indonesia and Thailand failed to reach their set targets for this past June and as a consequence their inventories are low, Hoe underscored.

Vietnam’s inventories are high so if the global demand such as in the US picks up for the holidays later this year the nation’s shrimp farmers will be well positioned to capitalize and increase sales.

Hoe added that with some good fortune shrimp prices may even bounce back by 5-10%.

In addition, recently signed free trade agreements between Vietnam and promising seafood markets like the Republic of Korea (RoK) and the Eurasian Economic Union are expected to prop up sales.

To be prepared to tap these opportunities, businesses should take extra precautions to strictly comply with regulations on food safety and technical standards of foreign markets, he stressed.