Inventories at US retailers and dealers are bottoming out and demand is set to improve substantially in the next two to three months.

It's been a long and difficult 12 months for U.S. shrimp suppliers, and the market has been saturated since 2022, with weak sales and falling prices. The good news is that this market downcycle is probably coming to an end, and the next uptrend is just around the corner.

Jim Gulkin, managing director of seafood trading firm Siam Canadian, predicts that global shrimp demand will recover in the second half of the year as the U.S. market is destocked.

"Cold storage in the U.S. is not fully loaded," Gulkin told UCN. "Many of them are actively looking for new customers. We are approaching a point where US importers, retailers and wholesalers must consider restocking. Although we see some fluctuations in the price of origin, most pricing is based on or below the cost of production, which will stimulate price increases to some extent once the end market demand comes up. So I think we're in the last phase of the market weakness and for all intents and purposes we've bottomed out."

"If imports fall for nine to 10 months in a row, then inventories will also fall. Over the past year, there has been so much shrimp inventory in the United States that retailers have been less willing to buy it, and while the restaurant industry has picked up, it hasn't been enough to make up for the loss of retail. "At this point, retailers are not trying very hard and are not willing to cut prices or promote excess products. They want to ensure profits."

"But now we have reached a tipping point, importers are starting to place orders, and things will pick up in the next few months, maybe as early as June, as late as August, people are not stopping consumption, on the contrary, shrimp products are cheaper than before inflation."

"Given this situation, the demand in the US is going to be very encouraging to farmers in Asia and South America. Everybody is going to jump on the bandwagon. It's a herd mentality. When one retailer decides to buy, others follow, importers, wholesalers, catering companies all have to compensate for the inventory, and then prices go up."

"We expect prices may not skyrocket like they did in 2021, but they will rise from the bottom. The United States is more aggressive in sourcing cooked shrimp, shrimp, headless and shelled shrimp and other products that give Asian exporters an edge. Their value-added product line is not moving as fast as expected. A lot of Ecuadorean companies have moved in that direction, but they haven't caught up with Asia yet, so it's going to take them a lot longer, and I think they lack a labor advantage, which is much more difficult than people think."

"If Chinese imports can accelerate, Ecuador's intention to develop value-added products will be reduced. If the margin is high enough, it will be much easier and faster than the finished product."

Still, Gulkin believes U.S. importers will be more conservative in their purchases than in previous years. "I don't think the Americans are going to be as crazy as they used to be, and I don't think the orders are going to be big. The lessons of 2021 have made many conservative, with companies falling into high-value species like crabs and scallops, where prices have plummeted. But the fall in shrimp prices has been less dramatic, with people waiting for stocks to drain before starting to order; Similarly, low prices can cause another problem, with most Asian countries cutting production, leading to a shortage of supplies. When the price of raw materials is too low, farmers are bound to balk. It happened in Thailand, it happened in Vietnam, it happened in Indonesia."

"So, by the end of the year, there may be another problem in the global market, which is India production is down, Vietnam production is down, Thailand production is down. "And I also think at some point, when importers are placing orders, there will be demand outstripping supply." "Gulkin said.