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India shrimp production expected to come in below forecasts

Producers not expecting production increases because low market prices are forcing them to reduce pond seeding.

Indian shrimp production is expected to come in below original forecasts for the year ended March 31, industry observers told IntraFish.

Indian producers make their forecasts based on a production cycle beginning April 1.

At the start of the current year, forecasts were for production to come in just short of 700,000 metric tons farmed weight, or head-on shrimp, but those estimates are being revised downward to between 620,000-650,000 metric tons. The drop is the result of producers cutting back production because of low global shrimp prices.

"But the figure will still be well ahead of the 566,000 metric tons produced during the financial year 2016/17," one shrimp producer told IntraFish.

Despite lower market prices this year, producers have been facing higher feed and fuel costs, leading many to seed their ponds in lower quantities, particularly for the second harvest of the year taking place over November and December. Producers have also been harvesting smaller sizes to avoid the higher cost of producing larger sizes.

"There is a little bit of a mismatch, a disconnect between what's going on in the markets and the origins," one Indian industry source said.

"In India there are a lot of small farmers, so for them its not like being a big corporate -- whenever they make losses they will hibernate for a season," a second Indian industry source said.

Typically, many farmers tend to stock their farms after southern India's festival season in mid-January. Given a two-and-a-half month to three-month growing cycle the earliest harvest generally come in March or April.

EU ban threat

Following concerns last year of a potential ban on Indian shrimp imports into the EU, the European Commission is still putting pressure on Indian exporters, with the very real likelihood of increasing inspections even further.

Among the EU concerns are the placing of ponds meant for domestic production side by side with those meant for exports, “where medicines used for domestic production inevitably would flow into the ponds used for export products.”

But the second source said the Indian industry has little to fear from the prospect of increased checks by the European Union because of the seriousness, with which the industry takes quality concerns and the strict regime imposed on exporters, which includes the threat of revoking export licences for practices likely to damage industry's reputation.

Timeline of demand

For those packing for the US market there are a number of peak periods.

Packers work on Thanksgiving and Christmas orders for a 10-week period from the start of October. This year there is expectation of strong sales, as the US economy powers ahead.

"We think demand will pick up substantially and expect prices to increase, but I don't see a big price increase happening," the first source said.

Work on Lenten orders tends to start toward the end of January or early February, depending on when Easter falls. Demand for cooked shrimp used in salads picks up for the Superbowl, which precedes St Valentines Day in February, another important date for the industry.

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