Ecuadorian shrimp exporters face soaring farmgate prices

Ecuadorian shrimp exporters have been facing a sharp increase in farmgate prices in the last several weeks, which has pushed export prices up while compressing margins, sources told S&P Global Commodity Insights.

A combination of supply constraints has reduced availability in the country, leading shrimp farmers to raise their offer prices and ask for premiums on large volume deals, according to market participants.

Platts does not currently assess Ecuadorian farmgate prices, but bids, offers, values and trades received and published by Platts since Oct. 1 show prices increasing by around 70 cents per kilogram, or 17%.

Values for head on, shell on shrimp with 30-40 count per kg were heard around $4.75/kg ex-farm on Nov. 8. On Oct. 1, prices for the same product were talked at $4.05/kg ex-farm. In early September, such prices were at $3.70/kg ex farm, marking an increase of over $1.00/kg since then.

Some market participants reported even higher prices for 30/40 HOSO during the week ended on Nov. 8, at up to $4.80/kg ex-farm.

A similar movement was seen for most sizes of shrimp. Indicative values for the smaller sized 40/50 HOSO were reported at $4.30/kg ex-farm on Nov.8, compared with $3.80/kg on Oct. 1. The larger 20/30 HOSO was priced at $4.90/kg ex-farm, from $4.35/kg ex-farm on the same dates.

Part of the price trend is explained by seasonal factors and increased purchases for year-end celebrations. The transition from El Niño to La Niña, resulting in cooler-than-usual weather, has been slowing down growth and reducing survival rates in farms.

"Shrimp needs high and stable temperatures to survive and grow," an expert said.

But some market participants see a deeper and more sustained pattern change. Several years of falling shrimp prices have prompted some farmers to reduce seeding and even discontinue operations, according to these sources. Besides lower production, a drop in inventories this year has been affecting supply.

"Inventories from consuming countries are now at half than what they were last year, according to data from clients in US and China," a major shrimp supplier said. "Most producing countries have cut back output," the source added.

Ecuador has also been dealing with daily energy cuts since late September(opens in a new tab), with no relief on sight. The country is facing a historic draught and around 72% of its electricity generation comes from hydroelectric power, according to figures from ministry of energy and mining.

Ecuador is the largest exporter of shrimp globally, supplying 1.22 million metric tons in 2023, followed by India, with 717,610 metric tons, according to S&P Global Commodity Insights.

Export prices have responded to this increase in farmgate prices, although some sellers highlight that the rise in ex-farm prices has been more intense.

The Platts Ecuador Shrimp Marker increased by $200/mt on Nov. 7 from the previous day, to $5,900/mt FCA Guayaquil, and up from $5,670/mt on Oct. 1. The assessment considers a tradeable value for 30-40 count per kg head-on, shell-on shrimp with cooking quality.

Trades to China of 30/40 HOSO, with lower quality requirements, have been reported at up to $6.00/kg CIF China in the week ended on Nov. 8, up from $5.55/kg CIF in mid-October.

Currently, Ecuadorian exporters are working to ship orders booked to supply higher consumption near the Lunar New Year in China and other Asian countries, prompting many to increase purchases from farmers and contributing to the uptrend.

Other large exporters, with their own shrimp production, are maintaining their sales and waiting to see how demand will behave in major consuming countries.

"If shrimp consumption is high during the holiday in China, we might see prices sustained [at current levels]," a source said.