[Reposted from Undercurrentnews, please find the original article here, we are not  in any way responsible for the source content]

Reporter: Neil Ramsden

While Vietnamese pangasius raw material prices are rising, border inspections and associated costs are adding up on the US side, pushing prices up, sources told Undercurrent News.

At the beginning of July sources told Undercurrent that prices had continued to ease from a peak of $2.50 per kilogram — for EU-treated, 100% net weight, freight on board from Ho Chi Minh City – to as low as $2.25/kg. However, this had been expected to reverse, and this appears to have been the case.

Prices at the start of August are back up to $2.35/kg, two Vietnamese exporters and one EU importer told Undercurrent.

“Raw material prices have increased the past few months as the fingerling supply was reduced, while demand remains strong on the farmers,” said Bob Noster, national sales manager for procurement of shrimp and pangasius with Seattle Shrimp and Seafood.

“The processors are staying busy with many outstanding contracts still to be processed and shipped to China and the US.”

Due to high demand from these markets, some Vietnamese packers have had to outsource for raw material to complete orders, while a few continue to source from their own ponds, he added.

In the US, he said, the 100% inspection rate required by the Food Safety and Inspection Service of the US Department of Agriculture (USDA — as of Aug. 2) is adding to replacement costs for pangasius arriving at the border.

“We are fast approaching the $2/lb level, and all indications point to the price breaking that level over the next few months,” he said.

Don Kelley, procurement manager with US importer Western Edge Seafood, said the “current costs of new products do support a market price of $2.05-$2.15/lb” already.

This higher level is more related to USDA-related expenses rather than raw material cost, he suggested. “This higher market may find support as there is lower supply in the marketplace due to USDA actions.”

“There are currently hundreds of containers on hold awaiting testing. After this hurdle [beginning 100% inspections] is adjusted for, there will be USDA ‘full compliance’ on Sept. 1 which may cause further delays for labeling corrections and so on.”

Two sources based in Vietnam confirmed hearing imports were “stacking up” at the US border.

Prices should remain firm

One of these two Vietnam-based sources – an executive with a large producer and exporter – told Undercurrent 2017 would see a lower overall output of pangasius than 2016, and that prices were likely to remain firm into the fall.

“The usual seasonality means from mid-August to the end of September, orders for the holiday seasons tend to bring demand and prices up,” he noted.

As well as the shortage of fingerlings put into ponds early this year, the weather has been cold by Vietnam’s usual standards, he added. “You’ve got a combination of slow growth and fewer individual fish.”

Inventories in southeast Asia and the Middle East are low, he said, so he expects demand to be firm there in the coming weeks.

While Europe remains a declining market, China continues to take up the slack.

“In Q2 China became our number one market, and if you look at the weekly statistics, it’s up there every week,” said the executive in Vietnam.

Back in Vietnam, the government continues to work with US authorities, with the USDA equivalency deadline looming. “It’s looking likely, in my opinion, that Vietnam itself may gain the equivalency first, and then come to inspect the individual companies later,” he said, offering the fact that his company had not yet been inspected as evidence.