A multitude of issues, both global and regional, are set to weaken Indian vannamei shrimp prices yet further over the coming month, farmers and traders told Undercurrent News.
Current farmgate prices for Indian head-on shell-on (HOSO) shrimp are approximately $0.80 higher than Ecuador's for 20/30 count shrimp, growing to a price gap of $1.20 for smaller 40/50 counts, according to a west coast Indian shrimp exporter, who wished to remain anonymous.
Based on current prices (below), the source felt that there would in all likelihood be a price drop of roughly $0.50/kg across all exported sizes within the next few weeks. This would still keep them above current Ecuadorian price levels, which have been incredibly volatile in recent weeks after coronavirus-related blocks to three big shrimp packers and mandatory inspection requirements were introduced by the country's main market, China.
"Ecuador is a lot less expensive than India, and with all the problems they are having in China they are pushing sales to every market, and these low prices with an assured quality are helping them enter easily," the trading source told Undercurrent. "But Ecuador prices are not practical and feasible to sustain the industry."
A US importer of Indian vannamei shrimp agreed, telling Undercurrent earlier in July that they are seeing prices soften in the country at the moment.
"This is partially a result of Ecuador prices falling and China importers pushing India prices down as a result," the second source said. "Another factor is US purchases are slowing down, COVID resurgence is a big factor there. Some Indian packers have inventory and worried about continued weakness in the market are lowering their prices to clear out stock."
As reported by Undercurrent last week, Ecuadorian shrimp traders have turned from China to the US since the former's suspension of imports from three of the largest suppliers.
The result is that US buyers are being offered the same species of shrimp, at a significantly cheaper rate, and from a closer source than their usual Indian supply.
Although prices are falling, many Indian processors are also understood to be holding onto large volumes of frozen shrimp until the market improves, importer sources told Undercurrent.
Regional disparity an issue
It's important to note that shrimp prices are far from uniform across India at the moment, according to farmer and industry veteran Manoj Sharma, owner of Mayank Aquaculture.
Sharma, who issued a statement earlier this month urging farmers to withhold from panic harvesting, told Undercurrent there is currently a difference of approximately INR 50/kg ($0.67) between the higher prices in the main farming region of Andhra Pradesh, and farmers in other regions such as Gujarat, West Bengal, and Maharashtra.
"This disparity in price offer is also a major dejection to farmers in present scenario," he said. "For me, this is a question mark; one country and so much price disparity!"
The first trading source told Undercurrent they suspected the disparity had been caused by the east coast's year-round focus on vannamei production, whereas western states such as Gujarat only farm for a single season between July to November.
"I suppose the gap now will reduce as prices on the east coast are also reducing, unless west coast drops further," he noted.
Meanwhile, Sharma noted that in the current situation, many farmers in Andhra Pradesh also have the option of switching to and fro between shrimp aquaculture and fish farming, which had been the focus of the region's aquaculture during the early 1990s. "But states like Gujarat and Maharashtra don't have that choice."
He added that a similar gap was likely to be seen in production volumes this year, with Andhra Pradesh expected to see a harvest drop of 30%, while volumes from Gujarat are expected to fall by 50% year-on-year, he expects. [In] other states also things are not that promising. We can say 35% to 40% less."
This is broadly in line with forecasts made by several experts to Undercurrent earlier this month.
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The first shrimp trading source noted that their business with China had slowed considerably owing to the current confusion in the Chinese market, and they did not expect stability until Indian vannamei prices come down somewhat.
Although Indian media has reported significant delays for getting seafood products through Chinese customs following both the border skirmish and the positive test for coronavirus on packages of Ecuadorian shrimp, the exporter added that he personally had seen no delays out of the ordinary.
"Frankly normal delays on clearances for the few containers that arrived," the trader told Undercurrent. "Chinese are checking everything from seafood to meat so no special treatment."
Ahmed Sait, director of Kochi-based seafood trader Netfish, told Undercurrent their Chinese client had anticipated that trading difficulties would arise during the rising border tensions, and subsequently canceled their orders. "Being a friend, he didn’t want our business to get stuck."
"Presently the prices did come down last few weeks, it could have been because China wasn’t buying and USA not that active," Sait continued. "Also presently again some factories are not operational, or reduced operations, due to lockdowns in many districts to control COVID. Here in my city [Kochi] also many seafood factories are not operational."
According to Sait, the central processing area in Kochi has been declared a containment zone and has been in lockdown from July 13. The situation is due to be assessed on July 24, and may remain in lockdown until July 31, he expects.
"Likewise, many different districts and states are following their own pattern of lockdowns/ hotspot/ containment zones," Sait told Undercurrent.
July 27, 2020 at 04:15PM
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Indian shrimp prices set to soften further in wake of Ecuador shrimp glut - Undercurrent News
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