Frozen tilapia prices near five-year-highs as China sees 2013 production fall off

The price increase for Urner Barry quotations of 3-5 oz frozen tilapia fillets was the first jump since the beginning of July.  Last week’s closing average price for the item was $2.35 lb about 24 percent higher compared to year ago levels and just shy of the five-year-high price reached in late 2010.

Importers said the summer price hike is a result of higher overseas replacement costs—or the import price per pound.  According to Urner Barry’s latest Aquaculture Insider’s Report, overseas replacement costs in June were $2.05 per pound up 10 percent compared to the start of the year and the highest such value since May 2011.

The hike in replacement costs coincides with a 20 percent decline in US tilapia imports that have fallen to 140.9 million lbs; a near 40 million lb difference compared to year ago levels.  The steep drop in frozen fillet imports is heavily attributed to a drop in Chinese imports—the top supplier to the US.

For example, YTD US imports of frozen Chinese tilapia fillets are down just over 20 percent to 124.5 million lbs.

According to one major importer, China’s production woes are a result of massive 2012 buying when US importers jumped on a glut of cheap tilapia last summer that drove US imports up 65 percent compared with 2011.

This jump on summer orders saw replacement costs—or the import value per pound—plummet from $1.94/lb in May 2012 to $1.75 in October of that year.

However, this ‘emptying of the ponds’ last year caused demand to exceed supply in 2013 which forced overseas replacement costs soaring 17 percent from $1.75 to the aforementioned $2.05/lb.

At the same time, higher replacement costs were met with increased production costs namely with feed prices.  For example, CME Futures Prices for soybean meal are currently 10 percent above levels recorded in January 2011 and importers said these increased costs have pushed Chinese tilapia farmers out of the business, unable to produce under tighter margins.

And even though frozen tilapia fillet imports to the US typically follow a seasonal trend, peaking in January, bottoming out in March and steadily increasing through the remainder of the year. Importers said China’s overall supply base is significantly shorter in 2013 than in years past which is likely to result in less tilapia fillet imports to the US for the remainder of the year.

As the industry rounds out the third quarter, US importers are currently taking buying positions from overseas packers. And as importers head into the latter part of the year, further price hikes may be on the horizon amid China’s decreased production in tandem with a seasonal buying period ahead of the Chinese New Year.