Following a year of decidedly mixed fortunes for shrimp markets and shrimp farmers, Gorjan Nikolik, senior seafood analyst at Rabobank, shares his thoughts on what the rest of 2021 might have in store.
In terms of shrimp markets, Nikolik notes that demand in the EU remained fairly steady overall, but he paints a very different picture between the two other main ones – China and the US – during a volatile 12 months.
“The big story is in China – from July onwards China imported a lot less shrimp, almost half of the level of 2019. Q4 was particularly bad: in November they fell to 38,000 tonnes, down from 78,000 in the same month in 2019; in December they fell to 49,800 tonnes, down from 97,000 tonnes,” the Rabobank analyst notes.
The key to this decline has been a tendency for the Chinese to associate imported seafood with Covid-19-related health risks.
“The Chinese government has been informing people that the Covid situation outside China is quite dire, generating fear among Chinese consumers. The government has also been constantly checking for Covid on frozen products, causing delays and putting imports at risk,” he adds.
Whether this will persist remains to be seen.
“It’s hard to know how this will change in 2021 – the fear is gradually getting less, but imports are still below what they were before the pandemic. How quickly that will change is the big question of this year,” Nikolik notes.
The US, on the other hand, has been a very different picture.
“What was particularly unusual was that both the volume and value of shrimp imports in the US increased. Normally an increased volume is coupled with lower prices, meaning the overall value is roughly the same. However, it’s evident that US consumers increased their consumption, particularly their consumption of higher value, processed products. So they were effectively spending more per unit of shrimp, making the overall value increase,” Nikolik explains.
“Shrimp was the big winner in the US market: what we’ve seen in the pandemic is that consumers have moved towards food they are familiar with – they buy what they know to cook at home. There were huge leaps in retail sales during 2020: frozen raw shrimp, a $2 billion industry, went up by an incredible 47 percent, frozen cooked shrimp by 25 percent. We haven’t seen this kind of growth rate in a mature category in a very, very long time,” he adds.
And Nikolik believes that demand in the US will continue to be solid in the year ahead.
“Will this strong demand continue when the food service sector opens up? I think personally we can be bullish on American shrimp consumption. Food service demand is likely to increase, as more people are vaccinated, and I don’t think retail sales will go down, so it’s a very bright prospect. And imports have been strong so far this year,” he notes.
As for supply, Nikolik notes that few major challenges have been reported so far this year.
“You can’t guess shrimp, it’s not like salmon, it’s a 120-day cycle, but there are no current issues in supply that we know of – there’s no outbreak of disease or any major climatic issues, which means that we can assume that supply will basically follow demand. Supply is elastic in shrimp, due to the short production cycle, therefore it will follow the demand of 2021 – in other words high demand and probably high supply. It’ll still be a buyer’s market, I don’t expect spikes in any way,” he predicts.
Rabobank’s analysis suggests that global shrimp production figures fell only modestly, despite the pandemic, although one or two countries showed a more severe decline.
“What happened in 2020 is a drop of about 5 percent – some other people will say a bit more, but for us the numbers compute to about 5 percent. India is the big driver – their exports were down 150,000 tonnes, some say more like 200,000. The other that’s down is China, Vietnam is largely flat, maybe a small increase, but Ecuador actually produced more in a very difficult period and have been producing more for a while,” he notes.
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