W4 Shrimp Update: Global Challenges of Oversupply, Low Prices, and China's Shifting Demand in 2024

Rabobank's Insights on 2024 Global Aquaculture Landscape

The global aquaculture industry in 2024 faces a stabilizing trend in farmed salmon and fishmeal production, characterized by manageable supply increases and slightly lower prices. However, as outlined in Rabobank's "Global Aquaculture Update 1H 2024" report, the farmed shrimp sector presents a different scenario with heavy oversupply, remarkably low prices, and weakened Chinese demand. Shrimp farmers endured one of their most challenging years in over a decade in 2023, marked by low demand in Western markets and high supply from Ecuador. This resulted in prices plummeting even below the lowest point during the COVID-19 pandemic. The report suggests that these adverse conditions, coupled with elevated feed prices, persist into the new year, making it difficult to predict when the market might stabilize. The surge in China's shrimp imports in 2023 did not translate into the expected rapid recovery. Rabobank anticipates that low prices and weak demand could become the "new normal," with increased local supply further dampening China's import demand.

Argentina’s 2023/24 Shrimp Season Faced Uncertainty Amid Labor Conflicts and Sales Pressure

The 2023/24 shrimp season in Argentina is marked by favorable volumes comparable to the previous season, along with strong sales in terms of prices and demand. However, sluggish sales of shrimp tails are impacting price levels, and the significant stocks in cold storage are exerting pressure to accelerate sales. A labor conflict, causing a delay in the season's start in Nov-23, is an ongoing concern. Despite the season being operational under a government-mandated conciliation, the resolution period is set to conclude at the end of the month. The critical decision facing producers and exporters revolves around negotiations to continue the season or opt for an early closure, considering the existing stocks and sales pressure.

USITC Investigates Ecuadorian Practices, Potential Impact on US Imports by Oct to Nov 2024

In Dec-23, the United States International Trade Commission (USITC) launched an investigation into Ecuadorian shrimp, accusing it of selling shrimp at low prices and receiving subsidies. Expected to take a year, the investigation will result between Oct-24 and Nov-24. If the United States (US) determines the existence of dumping or subsidies, additional import duties may be imposed on US importers. The resolution on subsidies for Ecuador and other investigated countries is set to be announced at the end of Mar-24, following a postponement requested by the US industry.

Challenges in Shrimp Farming in India and Ecuador Amidst Oversupply and Falling Prices

Shrimp farming in India and Ecuador faces challenges like oversupply, falling prices, and market competition. Ecuador is the world's largest producer of farmed shrimp, with a projected 12% increase to 1.4 million tons in 2023. India's production is expected to remain around 700 thousand tons. The resurgence of black tiger shrimp may offset India's reduced production. Despite speculation, the industry is advised to adopt a 'watch and wait' approach due to global oversupply and ongoing US anti-dumping investigation into frozen shrimp from India, Ecuador, Indonesia, and Vietnam.

VASEP's Projections for the Vietnamese Shrimp Export Market in 2024

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam's shrimp export outlook for 2024 varies across major markets. Despite a 15% year-on-year (YoY) decline in shrimp exports in the US in 2023, positive signals are anticipated in 2024, with an expected increase as food demand improves and inflation cools down. However, an ongoing anti-subsidy investigation into Vietnam's frozen warm water shrimp by the US introduces uncertainties. The Japanese market, facing inflation and a weakened yen, experienced a 24% YoY decrease in shrimp exports in 2023 but is projected to recover in 2024, offering potential growth for Vietnamese shrimp.

There is a slow demand in the European Union (EU) market in 2023, attributed to the Russia-Ukraine war and economic factors, resulting in a 39% YoY decline in Vietnamese shrimp exports. Although recovery is anticipated, challenges persist due to economic and political instability. Meanwhile, despite a general downward trend in 2023, the Chinese market shows signs of recovery in early 2024, with the end of the COVID-19 pandemic and positive economic indicators. The Red Sea conflict may increase shipping costs for Ecuador, potentially benefiting Vietnamese shrimp in the Chinese market. VASEP forecasts an overall 5% YoY increase in Vietnamese shrimp export turnover in 2024, reaching approximately USD 4 billion.

China’s Shrimp Imports Surge to 1.1MMT in 2023 Amidst Price Drop

In 2023, China's shrimp imports reached a record 1.1 million metric tons (mmt), despite a slowdown in the second half of the year, with a 10% YoY volume decrease and a 25% YoY price drop. The value of imports fell by nearly USD 1.0 billion compared to 2022. Ecuador was the top supplier, but the value remained at USD 3.5 billion due to falling prices.