Preface:
Gorjan Nikolik, an analyst at the Dutch Agricultural Cooperative Bank, said shrimp production in Asia could grow minimally by 2023, and he also thought prices were unlikely to improve much from current levels.
An intensive shrimp farm in Asia
Gorjan Nikolik, chief seafood analyst at Rabobank, explained that the combination of the global recession and the large number of shrimp entering the market has led to shrimp prices falling in the second half of 2022 – which is basically in line with the forecast at the end of the first half of the year.
"From the beginning of the year through March, the U.S. shrimp index price was $4.40 per pound, then slipped to $4 in June, and now it's $3.90 per pound, compared to $4.60 this time last year," Nikolik noted. At the same time, feed prices have risen – now about 25% higher than in 2019, much to the delight of the vast majority of farmers. ”
First, the story of the Asian shrimp industry
Asian shrimp farmers, in particular, will have a difficult year in 2023 after a difficult 12-month experience.
"Initially in 2021 everyone was expanding shrimp supply, for example, India recovered from 2020 and increased by more than 20 per cent," Nikolik said. But at the beginning of 2022, both China and India experienced weather problems, diseases and rising feed costs, and it now looks like shrimp production in both countries will show negative growth in 2022. Specifically"
"Vietnam's shrimp production is estimated to be flat from last year, and although Indonesia has been growing slightly, I expect it will also soon fall into a downturn due to its main exports to the US market." So, overall, Asia, which accounts for two-thirds of the world's shrimp production, is actually declining, with many individual farmers either dropping out or reducing their acreage. This is the first time since 2013 that total Asian shrimp production has declined. Until now, Asian shrimp has been a consistently growing industry, averaging 4.7% over the past decade or so. ”
Nikolik recently presented the latest producer survey results from the Global Seafood Alliance at the GOAL conference. However, while he found some insights promising, he suspected that some might deviate from what was practical.
"Some of the people who responded at GOAL tended to be optimistic about the outlook for next year, believing that China will make a big comeback as a major shrimp producer in 2023."
GOAL conference, forecast of China's annual shrimp production from 2010 to 2024
Comments from the survey pointed out that the production and consumption of shrimp were affected in 2022 due to flooding and the continued closure of restaurants due to the coronavirus outbreak, respectively, but most respondents believe that this situation will not be repeated in 2023.
"Respondents to the survey predict that China will grow by 9% in 2023, which is a large number – especially if it will be on par with Ecuador's growth," Nikolik noted.
As a result, Nikolik predicts that the Asian market will have a tough year in 2023.
"I don't think Asian economies will be isolated from the recession in the West, but the outcome will be something that will allow us to wait and see," Nikolik said. It is also difficult to predict China's foodservice consumption – not on microeconomic data, but on the development of the epidemic: as long as the epidemic is not controlled, strict restrictions will be imposed in many places. ”
Forecast of global shrimp production from 2010 to 2024
Meanwhile, demand for shrimp in Europe and the United States has been at shrimp prices in the second half of the year.
"I noticed an inflection point in the U.S. in the summer — double-digit growth in the first half of the year, but now double-digit negative growth: shrimp sales in August were down 20 percent from the previous month," Nikolik noted. ”
Second, the shrimp industry in South America
Despite the slump in the U.S. market, sales in Ecuador are climbing, rising 1.6% even in August.
"Ecuadorian shrimp have an advantage over Asian shrimp in the U.S. — they already have a way to produce shrimp at low cost because they have better biosecurity, and now they have significant shipping and market advantages when exporting to the U.S.," Nikolik noted. They have invested in the necessary processing equipment to handle all but the most complex processed products, as well as shrimp value-added products. ”
Shrimp production in Ecuador from 2010 to 2024
Overall, he believes Ecuador's total production this year is 30% higher than last year and is expected to reach 1.3 million tons. He believes there is room for the country to continue to grow, albeit at different rates.
"In 2023, our prices for the whole year are likely to be relatively weak and feed costs are likely to be a little bit better than this year because I think feed prices have peaked, but feed prices are still high enough to allow Asian farmers to grow."
Overall, globally, Nikolik expects the shrimp industry to see 6% to 7% growth this year, but only 3% by 2023.