Argentine red shrimp producers expect to see market recovery
After two years of heavy production, the international markets for Argentine red shrimp now seem to be overloaded and the prices are continually going down, reports Eduardo Campos Lima.
All the same, Argentinian exporters are optimistic and hope to see the situation stabilising soon, given their biggest buyers – Europe, China and Japan – have to prepare for their annual holidays in December and January.
“We know the stocks in Japan are almost liquidated at this point. China has to start buying soon, given that the Chinese New Year (January 25th) is the most important commercial date for the Argentine red shrimp,” argued Pablo Basso, sales director at Iberconsa Argentina.
“As soon as this movement begins, the Argentinian inventories will not last too long, because our freezing capacities are not that massive – and the prices will soon normalise,” he said.
Argentina has seen a row of large-volume landing years for red shrimp, with total production of 230,000 tonnes in 2017 and 250,000 tonnes in 2018. In 2019, to an equally big amount were added 14,000 tonnes caught in a fishing area in the northern part off the Argentinian coast, a region which traditionally produced no more than 5000 tonnes per year, according to Federico Angeleri, commercial director at Grupo Veraz.
“This made the situation a bit worse, because most international markets still had inventories from the previous seasons. The unusual production scared the importers and the sales stopped,” Federico Angeleri confirmed.
Another element in the price crisis and low sales scenario is the rise of production of the Ecuadorian whiteleg shrimp. In Federico Angeleri’s opinion, even though the two species occupy different spaces in the international market, the Ecuadorian product may have a negative effect on the behavior of the Argentine red shrimp prices.
“There was an overproduction of vannamei in the last few years and its prices have fallen everywhere. This works almost as an excuse to drop the Argentine red shrimp prices too,” he said.
The trade dispute between the United States and China also contributed to the red shrimp crisis in Argentina.
“The business was developed in Argentina by Spanish companies and this used to be a premium product with a small market. But ten years ago production exploded and it became a commodity as any other else – and commodities are subject to international fluctuations,” Federico Angeleri commented.
In 2018, class L1 whole shrimps were sold for US$7.50/kg. Now, prices are already down to US$6.40. Class C1 tails (frozen onboard) also fell from US$9.90/kg, in 2018, to a current level of US$8.85.
With the continually falling prices, a speculative trend began, stressed Iberconsa’s Pablo Basso.
“People stopped buying in order to wait for possible lower prices. It’s almost a psychological effect of the economic problem,” he explained.
But he doesn’t believe such a scenario can last much longer, considering the fact that inventories aren’t big in Asia or in Europe.
A partial solution would be the end of the Brazilian embargo on Argentine red shrimp, announced in June, after six years of blocked sales.
“Initially we were told we had full authorisation to export our products, but then we heard the Brazilian decision included only peeled and deveined shrimp. So, nobody dared to do anything yet,” explained Federico Angeleri.
According to Pablo Basso, the Brazilian market would not be able to solve the current problems of the Argentinian exporters, but the new sales would certainly help.
“We had been working on this matter for several years,” he said. Argentina and Brazil are neighbors and share the exactly same fishing seasons, so a partnership would be natural, he added.
“We know Brazil has an unsatisfied demand. It would be good news for everybody,” he said.
For Eduardo Boiero, president of CAPeCA, a major chamber of fishing vessel owners in Argentina, the inventories problem will not be solved soon, as it requires redefinitions in the business model as a whole.
“If the next seasons bring the same kind of volume of Argentine red shrimp we had in the past few years, we’ll have to review a few elements of the business, with all parts involved,” he declared.
According to Eduardo Boiero, the private sector in Argentina has been advocating for years the idea of elaborating and implementing a plan of integral management of the red shrimp production, in order to avoid this kind of unbalance. “We’ll keep following the same path,” he said.
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