Shrimp market forecast: optimistic production expectations

Aerial view of large shrimp farms in the coastal region of Giao Thuy, Vietnam. Photo: Adobe Stock.
Aerial view of large shrimp farms in the coastal region of Giao Thuy, Vietnam. Photo: Adobe Stock.

Despite falling prices and rising costs, the outlook for the shrimp market in the year just begun is optimistic. With production expected to grow by up to 7%, according to the latest Rabobank report, the shrimp industry may reach 6 million metric tons in 2023. Latin America, and more specifically Ecuador, will be the main drivers of this supply, which will be complemented by a recovery of production in Asia, especially in China.

Cooling demand and good supply

As noted in the salmon forecast report, shrimp also enjoyed a strong post-pandemic period, with a recovery in foodservice demand and good retail demand. Despite record supply growth, prices remained high in 2021. However, in 2022, as consumers cut back on foodservice spending and opted for cheaper retail options, demand for shrimp also began to cool as it did for other products such as salmon itself. Although these lower prices and higher costs, forecasts say that global shrimp supply is on a positive trajectory. "Price correction, on cooling demand and good supply", Rabobank's report sums it up.

Source: Urner Barry, FAO, GSA GOAL Survey 2022.

Respondents to the Global Seafood Alliance (GSA) GOAL survey conducted by the Dutch bank expect a 7% growth by 2023. That optimism is largely supported by booming supply growth in 2002, especially in Ecuador. Last year, the Latin American country became the world's largest exporter and producer of shrimp, surpassing India as an exporter and China as a producer. Low price levels, high feed costs, and biological problems caused a supply contraction in Asia. However, Ecuador and some other small Latin American producers continued the record growth in supply, thus capturing world market share.

Ecuador, American and world leader

Ecuador's historic growth will lift the Americas above 2 million metric tons by 2023, according to Rabobank's report. At year-end, Ecuadorian production was expected to exceed 1.35 million tons in 2022, and the annual GOAL survey indicated year-on-year growth of 18%, although the latest data indicated that supply growth could reach as much as 30%, which would be its highest volume growth on record in a single year.

"With a perfect climate, a low-intensity model, and large, vertically integrated farmers, the Ecuadorian industry has a unique advantage that will last for the foreseeable future", the report states. Ecuador and other Latin American producers are profitable even at current prices and feed costs, and this incentivizes them and also allows them to increase supply. The prospects for continued supply growth are therefore very high.

Source: Urner Barry, FAO, GSA GOAL Survey 2022.

China to lead Asia's production rebound

In addition to its good results, Ecuador's rise has a lot to do with the production decline in Asia too. According to the report, the largest shrimp-producing continent is expected to close 2022 with its first production decline since 2013, the year in which the outbreak of Early Mortality Syndrome (EMS) was at its peak. However, that small decline of 0.1% will not last. By 2023, Asian production is expected to rebound to supply growth at over 4% and exceed 4 million metric tons. This will be helped by increased production in India, a slight increase in Vietnam, and, above all, the strong recovery of 9.5% expected in Chinese production.

Following the lifting of the strict Covid restrictions that reduced demand and, confident that the floods that affected the main shrimp farming regions of southern China in 2022 will not recur in 2023, "China is expected to see production recover from 2022 levels, as both the local supply and demand of shrimp should improve", says the Rabobank report.

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