As the end of the year is approaching and we have 12 new months ahead, we are reflecting on 2023 and sharing our expectations about the coming year.

Looking at the shrimp industry in general, the price crash that started in its preceding year 2022 due to worldwide oversupply, is still the case of today. Regarding the European market in particular, where Covid measurements were the past and a drop in energy prices appeared since its peak in last years’ autumn, the first half of the year European import volume decreased by 10% compared to the first 6 months of 2022. Even though the exact statistics are not available yet, according to various sources, total Penaeus export volume to Europe in 2023 is projected to be less than its previous year. Unnecessary to add that the first 8 months of the year the market was also affected by high inflation resulting in low demand for shrimp product throughout entire Europe.

In September prices for regular sizes dropped even further as buyers’ main priority was to sell their inventories, part of it purchased at a higher price back in 2022. Keeping it short, the European market was down.

What is 2024 expected to bring for Europe? According to the European Commission, the current drop in inflation will continue to go down, energy prices remain stable, making the economy moderately recover which should have a positive impact on consumer trust, more buying-power and eventually an increase of export volume to Europe. So does the Euro, having an upward trend from early October onwards and is expected to gain more power against the USD in 2024. Nevertheless, in times of international turmoil it’s hard to predict whether energy prices remain stable, what impact it will have on consumer confidence and financial conditions. And therefore, we do not expect an increase of shrimp import.

Analyzing the export volumes of the main shrimp origins, see figure 1 (Shrimp Insights, Willem van der Pijl), the number really differs per country. For some origins the export volume increased, for other countries such as Vietnam, the total export volume for shrimp dropped quite a bit compared to quarter 1 – 3 2022. 

Figure 1.
Export volumes of the world’s six most prominent suppliers Q1-Q3 2021 to Q1-Q3 2023

Note. From “Export Data Review of Q3 2023, by Willem van der Pijl, 28 November 2023, Shrimp Insights (https://shrimpinsights.com/blog/export-data-review-q3-2023)

In regards to non-European countries, China is consuming increasingly more shrimp. Even though its own farming industry is rapidly expanding, in particular by the use of greenhouses (an earthened pond with plastic cover) and RAS technology (industrialized indoor farming), China is unable to meet its population’s demand (there is a gap of approximately 1 million MT per year), most of it being Vannamei, it’s buying the Black Tiger surplus in India and those import volumes are expected to rise. Where Vietnam BT export volume dropped compared to 2022, India’s Penaeus Monodon export volumes increased and are expected to increase even more in 2024 as broodstock rose too. Is China able to absorb this volume? Looking at its PCC, the projected crop yield is still a relatively small number. Considering the USA, where the Per Capita Consumption is about the same as in China (2.13kg), and for whom the main supplier is India, total shrimp import dropped compared to the year before. The USA is experiencing the same “oversupply situation” as Europe.

Switching back to Asia, Bangladesh is encountering a decline of shrimp production, caused by several factors of which the main ones are higher costs, drought, and various shrimp pond diseases. The Bangladesh Frozen Foods Exporters Association is advising to focus more on value-added products. In the end, optimization of the Bangladeshi shrimp supply chain is necessary and that’s exactly where LENK Frozen Foods (Asia) Co.,Ltd “jumps” in with the foundation of Luna Shrimp Farms, aiming to develop a sustainable supply chain model for Bangladeshi Monodon. In fact, we’re getting traction, the first product will enter the European retail segment in Q1 2024.

Diving into Latin America, Ecuador remains being a strong player in Vannamei for whom China is one of its main sales markets. Both having signed a Free Trade Agreement last May, it is expected that the “cooperation” between Ecuador and world’s second-biggest economy will even become stronger. Question is, will Ecuador’s harvest yield also be higher? Vannamei from Latin America being year-round available, there is a significant risk that the aquaculture will be impacted by el Niño, an event that is currently occurring which causes higher water temperature, and more rain to be expected between December and February, lasting most probably until April 2024. Besides the risk of flooding, the higher water temperature has all kinds of consequences to the industry including less availability of natural food in the ponds, impacting the growth of a shrimp and its survival rate.

In the end we all know that the shrimp industry is a dynamic sector. Both supply and demand are constantly affected by multiple factors. Its curve may shift from one week to another. According to Rabobank analysists, the global production of shrimp is expected to remain flat during the year to come and oversupply keeps most probably being present too. Will the expected drop in inflation eventually bear fruit?

Interested to learn more? Exchange opinions and ideas? Please contact us via info@lenk-frozen.com

References
Willem van der Pijl (2023). Shrimp Trade Statistics Status and Future Prospects August 2023. Shrimp Insights.

Willem van der Pijl (2023, 28 November), Export Data Review of Q3 2023. Shrimp Insights. https://shrimpinsights.com/blog/export-data-review-q3-2023

Fu-Ci Guo (2023). China Shrimp Production. Royal Agrifirm Group.

Inflation forecast to drop further and EU economy to show modest upturn. (2023, 15 November). European Commission. https://commission.europa.eu/news/inflation-forecast-drop-further-and-eu-economy-show-modest-upturn-2023-11-15_en

Las respuestas que usted busca sobre el fenomeno de El Niño en Ecuador. (2023, 30 November). El Universo. https://www.eluniverso.com/noticias/ecuador/las-respuestas-que-usted-buscas-sobre-el-fenomeno-de-el-nino-en-ecuador-nota/

Jory, D. (2023, 9 October). Annual farmed shrimp production survey: A slight decrease in production reduction in 2023 with hopes for renewed growth in 2024. Global Seafood Alliance. https://www.globalseafood.org/advocate/annual-farmed-shrimp-production-survey-a-slight-decrease-in-production-reduction-in-2023-with-hopes-for-renewed-growth-in-2024/

Molinari, C. (2023, 22 November). Lingering El Niño stoking seafood industry fears across Latin America. SeafoodSource. https://www.seafoodsource.com/news/premium/supply-trade/lingering-el-ni-o-stoking-fears-for-latin-america-s-aquaculture-farmers-fishers

White, C. (2023, 4 September). Bangladesh reports drastic decline in shrimp production. SeafoodSource. https://www.seafoodsource.com/news/supply-trade/bangladesh-reports-drastic-decline-in-shrimp-production

How does unpredictable weather conditions affect shrimp farmers? (2023, 16 November). JALA. https://jala.tech/blog/cultivation-tips/how-does-unpredictable-weather-conditions-affect-shrimp-farmers

Inflation impacting seafood marketing in the European Union (2023, 25 September). Food and Agriculture Organization of the United Nations. https://www.fao.org/in-action/globefish/news-events/trade-and-market-news/q3-2023-jul-sep/en/

Shrimp market bleak (2023, 18 September). Food and Agriculture Organization of the United Nations. https://www.fao.org/in-action/globefish/market-reports/resource-detail/en/c/1650814/#:~:text=Compared%20with%20the%20same%20period%20in%202022%2C%20cumulative%20imports%20during,added%2Fprocessed%20shrimp%20under%20the

Evans, J. (2023, 30 November). Rabobank: Global shrimp suppliers face challenging 2024. IntraFish. https://www.intrafish.com/shrimp/rabobank-global-shrimp-suppliers-face-challenging-2024/2-1-1563267

Annual inflation down to 4.3% in the Euro area (2023, 18 October). European Commission. Eurostat. https://ec.europa.eu/eurostat/documents/2995521/17689333/2-18102023-AP-EN.pdf/028b6ff3-2775-c4fb-4649-bbc8a0a46579

U.S. Shrimp Imports September 2023. NMFS.

15.12.2023