Hurricane Ida may be a boon for Asian shrimp producers

  • Hurricane Ida has wiped out over 30% of the shrimp fleet in Louisiana where the shrimp industry is worth US$1.3bn

  • Potential shortage of supply may increase US imports of Asian shrimp as it did during the Gulf of Mexico spill in 2010

  • The development is positive for Asian seafood stocks; we urge investors to consider names like CPF and Thai Union

Hurricane Ida may be a boon for Asian shrimp producers
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Follow
Tellimer Research
1 September 2021
Published byTellimer Research

In the 1994 film Forrest Gump, the title character played by actor Tom Hanks becomes an overnight success in shrimp farming in Louisiana when his competition gets wiped out by a hurricane and his boat is the only one standing. There could be parallels here for the Asian shrimp industry.

On Monday, Hurricane Ida struck the south of the US. In Louisiana, where the shrimp industry is worth US$1.3bn and employs over 15,000 people, 30% of the shrimp fleet has been destroyed, according to Reuters. Boats have been sunk and storage facilities decimated – about 50% of the storage facilities are currently out of action.

Although media reports have focused on Hurricane Ida's impact on the US oil industry, the devastation on the shrimp industry could be far worse.

Asia is the mainstay of the world's shrimp supply with the US as the leading market

The potential shortage of domestic shrimp supply in the US from Hurricane Ida could drive up imports. This would be advantageous for Asian shrimp players such as Charoen Pokphand Foods and Thai Union.

Asian countries like Thailand and China are the principal suppliers of shrimp globally with the US and Japan the main importers.

World's Shrimp Production

Gulf of Mexico oil spill in 2010 drove up shares of Asian shrimp producers

There is a precedent – on 20 April 2010, the Gulf of Mexico oil spill severely damaged the US shrimp industry's infrastructure in the region, with shrimp supply falling by over 30%.

This benefited companies such as Charoen Pokphand Foods and Thai Union, with shares of both stocks rising sharply thereafter.

Increase in share price 12 months after April 2010

Growth in revenue yoy

Asian stocks with seafood exposure

The potential for increased US imports of Asian shrimp is positive for seafood stocks in the region. We list below some of the beneficiaries that investors should watch:

Asian seafood stocks