Brief overview of market prospects for main Russian and US wild seafood commodities as per mid-December 2009
In December 2009 development of the Russian and US Pacific fisheries mostly depended on the fleets' preparation to the spawning pollock fishery taking off in January 2010 and contributing up to 50% of the annual proceeds to the fishermen's budgets, according to the overview prepared by analysts of http://www.fishnet-russia.com/ (https://www.fishnet.ru/) based on Japanese and Russian sources.
For the Russian fishermen, some of which continued operating on the pollock and herring grounds in December 2009, the general prospects for the year 2010 have been set already in late September 2009 when the TACs 2010 in the Russian Far East Fisheries Basin have been approved by the nation's government. In the meantime, the US fishermen had to wait until the middle of December 2009 when the North Pacific Fisheries Commission finally approved the pollock and bottomfish TACs 2010.
Thus the outlook for the main bottomfish operations in the year 2010 has been well formed with the TACs approved by the two sides, but the situation in general will also depend on other factors, including those falling out of the fishermen's influence. The market prospects remain vague and the producers will have to rely on their own estimates and other players' forecasts which are not always true.
Pollock
The Russian pollock TAC 2010 has been increased by 200,000 tonnes to 1.7 million tonnes, while the US TAC has remained at 900,000 tonnes. However, while the American producers are well aware of the need to reduce the output of pollock fillets and surimi mince, the Russian producers still focusing on headed and gutted pollock have to rely mostly on the Chinese processors filleting headed pollock for the European, US and Russian markets.
The balance of prices for pollock fillets and surimi has remained in favour of fillets. Lengthy talks on the Japanese surimi purchases from the season B have finished without signs of quick recovery of prices until the level of 2008, therefore even the Japanese surimi market players think that the US producers in the season A of the year 2010 at least will not raise the surimi production and prefer to focus on fillet production, as well as headed pollock and mince enjoying a strong demand on the US market.
The Russian producers are in tighter conditions as they strongly depend on sales of headed pollock to China and these have grown into a problem after the TAC's increase. According to some information, the prices have gone below the level of 1450 USD per tonne and even below 1400 USD per tonne of the products from the B season, the share of which in the annual TAC for the Okhotsk fisheries amounts to only 30%. The contribution of the A season amounts to 70% and the respective TAC has been increased by 100,000 tonnes as compared to the year 2009 and the TAC for the Kurile fisheries has been raised by another 50,000 tonnes therefore the Kurile and South Korean buyers are sure that the Russian supply will rise in the first quarter of 2010. Weakening of the market structure may come out as a result of smaller fish size caused by growing share of young pollock. The market specialists think that expected leveling of prices in these conditions may be connected only with the rise of sales of the Chinese pollock fillets on the main markets.
Pollock roe
The situation on the market of frozen pollock roe also remains unfavourable for the Russian producers. The only positive factor is a forecasted decline of production output in Alaska which may lead to emerging demand in the Russian raw material from the Japanese users who normally prefer to work only with Alaska roe or limit the use of the Russian raw roe to the need in production of the cheapest ready-to-eat items.
The TAC for the US pollock fisheries in the eastern part of the Bering Sea contributing approximately 95% to the total production of frozen pollock roe in Alaska has been reduced by merely 2000 tonnes to 813,000 tonnes. The TAC has been increased in the Alaska Bay, but production of roe from the raw material from the area has been very limited until now and in the year 2010 no substantial changes are expected. Scientists forecast that the pollock roe production in Alaska in the A season, the share of which in the annual TAC has been limited to only 40%, will decrease as the commercial stock recruits with pollock from the class 2006 which is expected to result into a dramatic fall of the roe yield.
According to some conservative estimates, the US production in the A season may decrease to less than 13,000 tonnes, however there are also such extreme forecasts according to which the seasonal production will unprecedentedly fall to less than 10,000 tonnes. In this case the Russian producers may really count on recovery of activity of the Japanese buyers at auctions in Pusan (especially if the range of fish size on offer at auctions in Seattle will not be much better than the range to be offered by the Russian producers).
Inert position of the Japanese buyers has been one of the main reasons behind the dramatic fall of prices at auctions in Pusan in spring 2009, when even the price of 9.00 USD per kilo has been taken as fairly high and that of 8.00 USD per kilo has become the average price level of actual sales which have been completely disappointing. Recovery of the former atmosphere at Pusan auctions is still possible, but the Russian producers have placed no great expectations as to the sales in 2010 due to fears that the rising supply may push the prices down taking into account the currently weak market.
Prospects for the rise of the Russian supply on offer at auctions in Pusan do not cause any serious doubts (according to some information, seasonal sales may take off with the products made by Sakhalin companies to be operating on the grounds off the Kuriles), though some people think that leading producers will probably minimize production of low grade items. The rise of production output is forecasted to result from an 11.5% increase of capture quotas in the Sea of Okhotsk as well as a 41.5% rise of capture quotas in the Kuriles. Therefore the Okhotsk pollock fishery may give the market more than 27,000 tonnes of frozen pollock roe. Taking into account other fisheries the total supply of the Russian products may reach the level of 32,000 tonnes, and the total supply of the Russian and US pollock roe may reach 45,000 tonnes, approximately 3000-5000 tonnes up on the result of the A season 2009 (the estimates differ fairly much due to the differences in the approach to data processing on the Russian production).
At the same time the current condition of the Japanese market of ready-to-eat pollock roe, the country being the main consumer both of the raw material and processed products, leaves much to be desired. The Japanese import of pollock and other cod species roe as per late November 2009 has been limited to only 40,500 tonnes, nearly 20% or 10,000 tonnes down on November 2008, while import of only frozen raw material has decreased by more than 8000 tonnes to merely 33,400 tonnes.
On the other side, the dramatic decline of purchase prices has encouraged a decline of prices for final products, thus pushing the consumption up (wholesale trade in Tokio has displayed a 6% price rise of ready-to-eat roe (to 4500 tonnes) through the first eleven months of the year. If the sales in the turn-of-the-year period develop more actively than in late 2008, the market participants will place more or less grounded hopes on the demand rise both in final products and in frozen raw material. However, brisker trade has been mostly dependent on low prices, moreover deflation has become a characteristic feature of the Japanese economy in the recent several months, which means that the process of raw pollock roe prices recovery will hardly be as quick as producers would like it to be.
Herring roe
The Japanese market of herring roe remains in the sphere of interests of not only Canadian and American producers, but also of Russian fleets participating in the Pacific roe herring fishery. However its condition still does not show any signs of noticeable improvement, thus decreasing the producers' interest in the fishery operations. Nevertheless hopes for the better may appear on the market, because in November 2009 on the markets of Tokio and Osaka sales of salted herring roe practically exclusively based on the raw material from Pacific fisheries were much larger as compared to November 2008. On the markets in Tokio, in particular, November sales jumped nearly by 25% on the previous year and the outlook for December 2009 was also fairly good. At the same time, the prices were nearly 15% down on the previous year result, which could probably mean that restrictions for raw herring roe prices would remain very strict against the background of dominating deflation trends.
Salmon roe and caviar
The price decrease by 25-30% as compared to the previous year has been one of the most important results of November also for ready-to-eat salmon caviar on the markets of Tokio, but unlike pollock and herring roe, the price fall has not resulted into a sales rise thus causing serious concerns as to the market condition and stability of the demand. Actually, sales of final sack roe have been worse than sales of sieved roe (as compared to the corresponding period of 2008), however import of Russian frozen raw material used mostly for production of sack roe has been developing much more actively than in 2008. In November 2009 the import volume amounted to more than 1000 tonnes, nearly 80% up in November 2008, and in general through January-November 2009 the Japanese import from Russia nearly reached 3500 tonnes, 260% up on the corresponding result of 2008. Prices for the Russian shipments have been fairly high at 1000-1200 Yen per kilo, which with the strong exchange rate of Yen has been in favour of the Russian producers facing problems against the background of record strong spawning runs of pink salmon.
Successful sales of products from the fishing season 2009 at least to the market of Japan have evidently encouraged improvement of the market position of Russian producers who had to settle very difficult problems caused by record high production against extremely indefinite condition of the domestic market after the crisis of 2008-2009. In the year 2010 such problems are not expected moreover such strong runs of pink salmons are not forecasted in the fishing season 2010. The situation with sales of frozen salmon roe to Japan can improve even more, especially if the condition of the Japanese market gets better and if the unfavourable forecast of pink salmon runs in the South East Alaska turns true (in the season 2009 the area contributed nearly 40% of the total US harvest of pink salmon with the products coming from the South East Alaska featuring traditionally high quality).