SEAFOOD.COM NEWS by Michael Ramsingh — April 14, 2014 — The Gulf of Mexico shrimp market is at new record high levels as the ongoing global supply shortage has driven industry participants to manage inventories through higher prices.
White shrimp prices for 26-30 ct. Gulf product recorded a new all-time high in trading during the first week of April, with an average quote at $8.05 per pound according to Urner Barry. Last month, the average price was up 43 percent from year-ago levels at $7.78 per pound.
As with other shrimp items, record-setting Gulf prices are the result of the ongoing global supply shortage, driven primarily from EMS-related production issues among top Asian suppliers.
Last year, US shrimp imports were down roughly 5 percent, about a 60 million pound shortfall.
The lighter inventories sent US buyers scrambling for product from both other overseas sources and to the Gulf.
While Gulf landings were average compared to recent years, the heavier demand for the domestic product pitted new buyers–starved of their imported supplies–against traditional Gulf shrimp buyers.
This increased competition forced the traditional buyers to secure their own inventories by cranking up bids for product that had not garnered such interest from so many market participants when overall shrimp supplies were not so short.
Now prices for imported shrimp from Asia and Latin America have started to come down. Sources suggest this appears to be due to an adjustment to increased 2014 imports vs year ago levels; a drop in foodservice demand due to poor winter weather conditions and expectations for improved production from the main overseas exporting countries in the coming months.
Distributors sitting on higher priced imported inventories are now willing to deal at discounted rates with the promise of cheaper replacement shrimp on the horizon.
April prices for 26-30 ct. white shrimp from Asia and Latin America are at their lowest levels since July 2013 and have steadily fallen from near record levels since the start of the year.
The downturn in imported shrimp prices could send Gulf market prices down. More supply for the domestic industry will come in once Louisiana's inshore season gets underway. In most years openings are between May 1st and 15th. But some packers suggest gulf shrimpers, flush with cash, might be reluctant to get operations underway quickly, delaying any market adjustment in domestic shrimp pricing until June.
Expectations are that the pressure to continue to sell off high priced imported inventories with discounting will continue, and that as domestic landing volume increases domestic packers will also see prices trend towards more normal levels.
Graph credit: Urner Barry
This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.