Signing many big contracts, shrimp prices will increase again

Many export processing enterprises in Vietnam have started signing large orders for important holidays at the end of 2018. Therefore, experts forecast that shrimp prices will increase again in the coming time.

Processing shrimp for export at Ca Mau Seafood Company. Photo: Nguyen Hue.

This is the information presented at the conference,"Solutions for the sustainable development of the shrimp sector", held by the Ministry of Agriculture and Rural Development in Bac Lieu on 3 June 2018.

The Vietnam Association of Seafood Exporters and Producers (VASEP) said that the Cuu Long Delta shrimp farmers were worried because the price of shrimp was reducing day after day.

Accordingly, white-leg shrimp prices in the first quarter of this year decreased by 15% compared to the fourth quarter of 2017 and decreased by 10% over the same period last year. In April 2018, the prices of white-leg shrimp with 60 - 70 units per kg decreased by VND 10,000 - VND 20,000 per kg compared to March 2018, reaching VND 110,000 -VND 120,000 per kg.

Since the beginning of May 2018, white-leg shrimp prices and black tiger shrimp prices in Soc Trang province as well as in the Mekong Delta have been gradually decreasing to the lowest level in the past two years.

The reason for white-leg shrimp's decline in price recently is because the production of commercial shrimp in all countries has increased because of the season, causing the supply to increase sharply. In addition, US demand fell due to high inventories, along with some political unrest in the Middle East. In addition, China increased the control of smuggled shrimp, which led to a decrease in shrimp consumption. Importers have taken this opportunity to put on pressure to decrease prices, especially in India, so individual businesses have to sell off.

According to experts at the conference, the price of white-leg shrimp in some localities began to level off, so shrimp prices will be improved in the coming time. In India, Bangladesh, Thailand and some other countries, the peak of the season has passed and it is likely to reduce supply in the third and fourth quarter of 2018.

By the third quarter of 2018, domestic factories are increasingly buying raw materials along with the need to "warm up" the import markets, so shrimp prices will begin to rise. The US's demand for shrimp is expected to remain good with high consumer trust and positive economic outlook. Imports of shrimps from major import markets are also expected to increase in late second quarter or early third quarter of this year.

In particular, many export processing enterprises in Vietnam have started signing large orders for important holidays at the end of 2018. Therefore, experts forecast that shrimp prices will increase again in the coming time, especially around August and September 2018.

Mr. Le Van Quang, Director General of Minh Phu Seafood Corporation said that it was expected from June to October 2018, the volume of Minh Phu products sold each month would increase by 20-50% compared to the contracted quantity in the first 5 months of 2018.

In this situation, businesses should focus on quality to sell high quality shrimp at high prices, while increasing the production of value-added products in which large shrimp exporting countries such as India have no strength to dominate the high-end market segment. Shrimp that have ASC standards (Aquaculture Management Council) are in high demand in the EU market and have higher prices than normal. This is also the product that many Vietnamese enterprises have deployed in recent years. Therefore, businesses and farmers in Vietnam need to maintain this standard.

At the meeting, Mr. Nguyen Xuan Cuong, the Minister of Agriculture and Rural Development recommended shrimp farmers to be calm in the current situation. For intensive farmers, they should not sell young shrimp. The farmers need to adjust the farming process and shrimp feeding. For enterprises, this should be an opportunity to review governance to reduce costs for high quality, to sustain the long-term market. In addition, the processing enterprises have to share difficulties with farmers, consider the farmer as a sustainable business.

Representatives of VASEP also warned that when the output of all countries increased simultaneously, importers wanted to put pressure on prices and wait for prices to fall. To maintain supply and adapt to the market, farmers should not abandon their work and should prolong the breeding time and wait until shrimp prices recover.

However, in order to overcome the difficult time when shrimp prices are reduced, this needs to have the consensus of the system for the solutions (there is no control over the price of shrimp, better breeding and better techniques). And in the long term, the solution is to build a brand name of Vietnamese shrimps (traceability, clean shrimp and certified ponds).