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US
stockpiled shrimp contributes to low
prices
The US shrimp industry is
in a state of disbelief as first quarter
gains have dissolved into a persistent weak
market.
Plenty of domestic inventory
and weak overseas replacement costs is keeping
business to a minimum. Inventories up to
four months old are being sold off a fire
sale prices by firms just needing to keep
up with overhead costs, cover bank loans
or even make payments to suppliers overseas.
US shrimp buyers are also laying
low as they await a $2.4 billion decision
by the US DOC next month to place tariffs
on imported shrimp from six countries.
Speculation is just about all
the market can do to forecast future market
conditions. However, it is largely accepted
that once duties are implemented, many in
the US shrimp industry will have a tough
time making it.
For many of the small to medium
sized firms, coming up with the funds to
pay for the product will be very difficult.
In order to maintain market share, some packers
overseas would simply prefer to wire funds
to importers here to cover the cost of duties
but that is not legal.
Anticipating a 90 day
retroactive policy on the duties to kick
in once the tariffs are announced, some
overseas packers began leasing and/or buying
warehouse space in the United States in
order to receive product shipped in and
allow importers to avoid paying the costly
import tax.
By setting up shop in the United
States, some worry that these foreign producers
could start selling direct to end users,
both retailers and restaurant chains.
Meanwhile, US demand for shrimp
has not curtailed, Wayland said, pointing
to the prevalence of shrimp items on menu
at major restaurant chains. Plus, with beef
and poulty prices on the upswing, shrimp
is becoming a popular alternative.
“What we’re seeing
is a significant increase in the penetration
in the market with the use of shrimmp, “ he
said. “Consumption is pushing right
around 100 million pounds a month and with
these prices I bet that’s even moving
up.
Wayland and othe rimporters
say while record shrimp imports during the
first three months of 2004 may have overburdened
the market in the short term, imports for
May and June should swing the other way,
thanks to the 90-day retroactive policy,
which would, in effect place duties on product
shipped as far back as April.
“Probably over the next
30-60 days, we’ll see some very big
holes in the inventory because no one is
importing right now of any consequence, “ Wayland
said.
The Wave |
