This August, the export price of Ecuadorian shrimp fell 1% month-over-month (MoM), despite favorable seasonality, and 23% year-over-year (YoY) to USD 4.98 per kilogram (kg), their lowest level since at least 2017, according to Ecuador's Camara Nacional de Acuacultura (CNA) data.
On the other hand, the Ecuadorian export volume in August managed to rise 18% YoY to 98.63 thousand metric tons (mt), driven by demand in Europe, the United States (US), and China. Ecuador is the world’s largest shrimp exporter.
The decline in prices and the increase in exported volume have one variable in common: increased production. As demand seems to be recovering –as stated in this past Tridge Opinion regarding US shrimp imports – the price decline seems to be driven primarily by increased global supply.
Naturally, as the plunge in prices has been more-than-offsetting gains in exported volume, total export value – which is volume multiplied by export price – has also manifested in a downtrend. In August, export value totaled USD 489 million, down 8% YoY and the fifth consecutive YoY decline.
Now, export value represents the gross income of Ecuadorian exporters. Considering that exporters are also facing higher input costs this year (feed, energy, and insecurity costs), their margins are suffering from both fronts. According to local reports citing CNA this past June, on average, Ecuadorian shrimp exporters were receiving a net 1 USD per pound less than last year (USD 0.45/kg). Some of the exporters are experiencing net losses.
For now, there are no reports of planned production cuts in Ecuador as in the case of India. Cuts in India, which are expected to be 15 to 20% according to recent local reports, should lessen global oversupply and thus support prices moving forward. Prices will eventually trend up, but the question remains of how much Ecuadorian producers will endure the current levels.
Meanwhile, positive figures from US imports in July suggest that demand will remain above the five-year average during H2-2023. As explained in this recent Opinion, demand in H1-2023 was only lower compared to 2022, which represented an anomaly, but not compared to its whole recent history. This further proves that the current downtrend in prices is a result of a supply increase.
Moving forward, prices are likely to face upward pressure. As global supply shrinks and current margins remain near or stay at unsustainable levels, prices are expected to converge to their recent historic average of around USD 6.00/kg. Yet, the timeframe of such an eventuality remains uncertain.
Source: Tridge and Ecuador’s Camara Nacional de Acuacultura (CNA)