Seafood Industry Perspective 2nd Quarter 2015

Seafood Marketplace Pricing Volatility

By Dean Hogencamp, CFA

Seafood-perspectiveswebShrimp market prices have been weak over the past 12 months due to oversupply. Approximately 90% of all shrimp consumed in the U.S. are imported, with import volumes increasing approximately 8% in the last year, breaking the 2004 record. Increased volume is attributed to the stronger U.S. dollar and higher farmed production from India, Indonesia, Ecuador and Thailand. Volumes have increased steadily over the past two years because growers have been able to control Early Mortality Syndrome (EMS) disease more effectively. EMS impacted crop yields negatively in the past and the disease persists. While global supply is strong, Vietnamese production was negatively impacted in 2014. Vietnam remains the 4th largest importer of Shrimp into the U.S., however has experienced year over year volume declines of approximately 25% as a result of EMS issues.

Increased supply levels have resulted in lower prices across all shrimp sizes. Larger offerings (e.g. 16/20 count per pound and larger) have decreased 5%-15% compared to the prior year, whereas smaller sizes declined 20% to 30%. Most shrimp importers are purchasing products to meet immediate needs because further pricing weakness is possible should upcoming harvests prove better than anticipated.

The domestic pink Salmon market has experienced pricing pressures over the past 24 months. Oversupply is the root cause, attributed to the increase in farmed salmon coming from Norway and Chile, inventory carryover from the 2014 season; Russian trade bans on imports, and the 2015 catch being the second largest on record (2013 was the largest recorded run). The oversupply of Salmon also can be attributed to lower export demand as a result of the strong U.S. Dollar.

Dean Hogencamp is a seafood products specialist. He has appraised numerous U.S., Canadian, Mexican, and European seafood-related companies involved in processing, importing, and distribution. Dean received his CFA designation in 2006 and maintains a degree in accounting from Bentley University.