Rabobank's latest forecast is that 'oversupply' will remain a major issue for the global shrimp market in 2024, and that a rebalancing of the market will require either a reduction in production or an increase in demand in order to drive prices to an inflection point.
The report says: "The shrimp industry is expected to gradually adapt to the reality of low prices and oversupply, with global production growth slowing to 0-3% year-on-year in 2024 to rebalance the global market."
Ecuador's supply surge is set to slow dramatically, with growth expected to be around 5% next year, a significant drop from the previous year's 12%, with factors contributing to this expected decline including China's domestic production growth, weak demand, and high inventories.
Uncertainty in the Asian aquaculture industry continues, with many countries still on the brink of break-even. A number of farmers are expected to reduce their seeding densities, which could lead to a prolonged decline in supply if prices do not improve significantly in early 2024.
Regarding shrimp prices, Rabobank analysts emphasize that market rebalancing is necessary to trigger a price reversal, and it is possible to see a price inflection point in 2024, but this depends on the magnitude of the supply decline and the degree of recovery in global demand.
"In the coming year, the shrimp industry should intensify its focus on global demand dynamics. In developed markets, we are seeing some signs that demand is no longer contracting. However, given the sluggish nature of economic growth expectations for 2024, we will likely only see a weak pickup in demand and prices."
"The direction of demand in China remains an unknown. the very weak performance of the Chinese market in the second half of 2023, which is likely to continue into 2024, may prompt Ecuador to shift its trade routes away from China to the developed world in order to survive in a low-margin environment. This will also force Asian shrimp farmers to make significant supply adjustments, as production costs in Asia are higher than in Ecuador."