Some recovery in the UK foodservice sector, and continued strong retail sales, lead several sources in the coldwater shrimp sector to expect prices on an upward trend through to the end of 2020, they told Undercurrent News.
Sources with an important UK importer (source A), and a major global producer (B), told Undercurrent prices reached their lowest point in April 2020, largely thanks to the impact of the COVID-19-prompted lockdown of the UK.
A major part of the cooked and peeled shrimp market is that which goes for "manufactured" shrimp -- small sizes used widely in the UK's sandwiches and salads. The lockdown of offices and city centers essentially killed demand in this key part of the foodservice sector.
This had begun to improve by July, with foodservice orders in the UK at around 45% of 2019's levels -- up from 15% in April, said source A. This took prices up 10-15% from their lowest point of £6.40 per kilogram (bulk) to £7.10/kg. The price gap between small, medium and large was marginal, he said at the time.
However, £7.10/kg remains down significantly on 2019's average £8.70/kg for the comparable specifications, he added. He feels prices should continue rising to around £7.60/kg by December, with retail sales "buoyant" and pubs, restaurants and sandwich bars reopening.
Source B confirmed April was the lowest point for prices. "Prices now [the end of August] are up maybe 10% from then, and I'd guess maybe they'll climb another 10% by December. I hope so."
The "Eat Out to Help Out" scheme -- which saw the UK government subsidize people's meals in restaurants, coffee shops, sandwich bars and more for August only -- does seem to have prompted foodservice orders for coldwater shrimp to pick up, he said.
"And orders are still good now -- that's for purchases to use in September and October, so the demand doesn't seem to be dropping off with the end of that offer."
"In terms of retail, with Christmas coming and for the rest of 2020, we're expecting a stable and similar performance to what we've seen so far this year. All in all, sales are good."
A third source, trading coldwater shrimp from a base in Iceland (C), played down how much the market had changed this year.
"In April there were some very low offers from certain companies, yes. I'm not sure if there were sales at that level though. Maybe it was just a little bit of panic from a couple of big companies; the raw material prices didn't support those offers anyway."
From those low prices, he agreed that August prices had ended maybe 10% higher. "But looking more generally at the wider market, it's quite stable. It's maybe trending upwards, yes, prices will edge up when foodservice reopens, but maybe that will be only when there is a vaccine to COVID -- so, not soon."
He estimated shrimp deliveries for foodservice, and for the manufacturing sector specifically, were at about 60-70% of their 2019 levels at the end of August. For retail they're at 130-140%, he added.
Retail sales up 10% for August
Nielsen Scantrack data, provided to Undercurrent by industry body Seafish, shows that UK coldwater shrimp retail sales for the four-week period ended Aug. 8 were up 10.3% by value, and 6.7% by volume: at £13.6 million and 1,075 metric tons.
That puts average price per kilogram at £12.65 for July/August 2020, up 3.4% year-on-year.
For the 12 weeks ended Aug. 8, it was a similarly strong performance: value sales up 13.2% y-o-y at £42.2m, with volumes up 9.5% at 3,324t.
"At the worst moments this year, Brexit and COVID uncertainties have combined to slow sales right down in the UK," said source A. "But lower prices should drive a good Christmas for consumption. Retailers have a good feeling about prices, and there are promotions now, with plenty of product."
Promotions are taking place in the UK and the Nordic countries too, he said.
However, it is interesting to note that Nielsen's data shows the price of the shrimp on supermarket shelves is up y-o-y: averaging £12.68/kg for the 12 weeks ended Aug. 8, compared to £12.27/kg the prior year.
Price per unit has averaged £2.73, up 2.4% y-o-y.
Source C, the trader, declared retail promotions in cooked and peeled shrimp an oddity.
"Promotions tend to spiral, one way or the other: when shrimp is selling well, retailers like to promote it, driving more sales. When it isn't, they don't."
"We haven't really seen a great deal of UK retail promotion for a couple of years, but we are seeing it now, and shrimp is selling well."
Good supply picture, besides Canada
Source B, with the large producer, told Undercurrent global supply was going smoothly and normally, with all plants (in producing nations such as Greenland, Norway, Iceland, and Canada) operating.
"In a couple of months Canada will stop producing, and the fishery will move to offshore vessels [which process onboard]," he said. "To be honest Canada doesn't have much impact on the market now, their volumes of cooked and peeled shrimp are so low."
"Prices used to be set when Canada began processing, but that's no longer the case. I'm not even sure all the inshore quota will be caught this year."
Of the 2020-21 31,398t quota to be caught off Canada's east coast, under 8,000t is to be caught by the inshore fleet. Source C agreed Canadian catches have been slow, but that the volumes are so low this hasn't impacted the cooked and peeled market.
Two further sources, based in Canada, confirmed it was unlikely the whole inshore quota was going to be caught. "The inshore quota is less than 50% caught as of today," said one, on Aug. 28. "Catch rates have fallen considerably."
This summer, Canada's Association of Seafood Producers (ASP) noted in a document filed to a price-setting panel that "in recent weeks the issue of the need for a Canada/UK deal to replace CETA [the UK-Canada Comprehensive Economic and Trade Agreement] at the end of 2020 has become a concern in the marketplace".
"The market is aware there are significant risks that a deal might be ready for 2021 and UK tariffs on shrimp could come into play. ASP contends this has put a further damper
on the market sentiment in the UK."
But source C, in Iceland, noted the UK doesn't yet have a trade deal for 2021 in place with Norway, Iceland, Greenland, or any relevant coldwater shrimp producer. "It's all up in the air for now."
"Iceland's government has said it is ready to complete one with the UK, that has, at worst, the same trading conditions as now," he said.
September 08, 2020 at 04:23PM
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Coldwater shrimp price seen trending upwards to year end, with sales moving nicely - Undercurrent News
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