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Record production amid weak Chinese demand weighs heavily on Ecuadorean prawn price in H1 2022

July 11, 2022

1 mins read

The technological prowess of the Ecuadorean prawn industry, achieved through decades of investment, alongside favourable climactic conditions, allows for highly efficient production. In contrast to rival producers India and Vietnam, the Ecuadorean prawn farming model is characterized by the presence of large vertically integrated players possessing the size and technology to scale up production at comparatively low unit costs. The country is also endowed with favourable climactic conditions, allowing three harvests per year, compared to one or two harvests in its competitors.

The aforementioned factors have contributed to Ecuador supplanting India as the world’s largest prawn player, and the first country to produce 1.0 million tonnes of prawns during a single calendar year (CY), in 2021. Indeed, estimated Ecuadorean prawn production stood around 620,000 tonnes for the first half of the 2022 CY (H1 2022), which is approximately 150,000 tonnes higher (31.9%) year-on-year (y-o-y), placing the country on course for its 21st consecutive year of growth, and a record 1.3 million tonnes output. Ecuador is also expected to be the first country to surpass 1.0 million tonnes of prawn exports in 2022.

However, Ecuador’s continued expansion presents concerns regarding oversupply and reduced profitability in the global farmed prawn industry. China is the main export market for Ecuadorean prawns, accounting for up to 55% of annual shipments, and Chinese demand has remained relatively subdued during the 2022 CY to-date. This is due to various factors, including a slowdown in Chinese economic growth, related to a spike in COVID-19 cases and large-scale lockdowns across key port cities, including Shanghai. Given the lack of alternative markets to absorb its record production, the Ecuadorean prawn price plummeted by almost USD 0.61/kg (- 20%) during H1 2022 to USD 2.77/kg. At USD 2.90/kg, the Q2 2022 average price contracted by USD 0.53/kg (-15.5%) quarter-on-quarter (q-o-q), and by USD 0.77/kg (-21.1%) y-o-y.

Ecuador prawns-1

Topics: Fish & Seafood
Ibi Idoniboye
Ibi Idoniboye

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