Overview of key markets for fish products from Russian and American Pacific fisheries in 1st decade of July 2011

The salmon season in Alaska has been progressing excitingly and fairly unexpectedly in the current year 2011. Most evidently, the results of sockeye operations will differ very much both from forecasts before the start of the season and expectations in the first half of the season, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources as per 13 July 2011.

Salmon

By the start of the second decade of July 2011 the Russian fishermen harvested only ca.39,500 MT of salmons which accounted for less than 10% of the recommended harvest of ca.403,000 MT for the current fishing season.

The sockeye catch totaled only 8500 MT, of which 7700 MT were harvested in East Kamchatka (including ca.6800 MT in Petropavlovsk-Komandor subarea) and ca.600 MT were contributed by West Kamchatka (including ca.550 MT in Kamchatka-Kurile subarea). The total recommended harvest of sockeye amounts to 32,200 MT.

The harvest of chum salmon amounted to only 2200 MT or only 2% of the potential harvest of 99,700 MT, because big catches of the species were not yet registered either in the Amur, or Sakhalin, or in the South Kuriles.

The pink salmon catches already reached 10% of the recommended volume of ca.264,500 MT and namely amounted to 28,200 MT, of which more than 95% were harvested in the coastal waters of East Kamchatka (ca.26,400 MT in the Karaginsk subarea) where the potential catch was so far estimated at 115,000 MT versus 73,500 MT in East Sakhalin and 44,600 MT in the South Kuriles.

The sockeye fishery in Alaska in the current season was very unstable, especially in the west of the state and in Bristol Bay, which last year contributed ca.70% of the total catch in all the fishing areas of Alaska.

Taking into account a downward trend in Bristol sockeye catches in late June-early July the observers say that the main phase of the spawning runs to key grounds of the Bay was finished already before the start of the second decade of the month. Local processors seemed to be ready that the sockeye season 2011 in Bristol Bay would turn extremely poor despite all the promising forecasts.

According to the Japanese importers, the total seasonal harvest of sockeye in all the areas of Bristol Bay would evidently amount to only 21-22 million fish (as on 9 July 2011 the seasonal catch failed to reach even 19 million fish) well below the official forecast of more than 28.5 million fish (equal to actual harvest in 2010).

The total seasonal catch in all the areas by the end of the first decade of July reached the level of 28 million salmons or more than 60% of the forecast. As compared to last year, the harvest grew by more than 4 million fish or nearly 17%.

As for prices for the US sockeye on the Japanese market, first more or less big lots (ca.10 container-loads) of frozen Bristol sockeye from the season of 2011 were actually purchased at prices of USD 3.00 per pound (CAF, Japan, HG product, grade 1, 4-6 pounds or 1.8-2.7 kg) or USD 6.60 per kilo. However, some market players said that the US producers had allegedly stopped offering products at the above price and would evidently press for a seasonal increase of contract prices taking into account the fishery's quick closure with unexpectedly low result.

Therefore, minimum offer prices were forecasted at the level of USD 3.25-3.00 per pound or USD 7.15-7.30 per kilo. The Japanese side reacted extremely skeptical on such prices which would make them sell the Bristol sockeye at least at JPY 650 per kilo to be taken by the buyers as extraordinarily high and cause their resistance.

In the recent months the Japanese buyers have been keeping an eye on the situation with prices for fresh Norwegian salmon with the average export price of the product in the last couple of months declining nearly by 35% to less than NOK 29.00. The price decline has rooted from a quick recovery of production capacities of Chilean salmon farms starting to exert a global influence on the market.

Many market specialists are sure that under the above conditions prices on the Japanese market either for frozen coho, or for frozen sockeye cannot be higher than JPY 600 per kilo (disregarding driftnet products), therefore the poor fishery in Bristol Bay in the first half of July 2011 is taken as no reason for renegotiations of contract prices especially against the background of strong coldstore inventories by the start of the season. Those were estimated at ca.56,000 MT, one third up on last year.

Coldstore inventories of frozen and salted salmon in Japan in 2010-2011

By summer 2011 the Japanese inventories of frozen salmon at main coldstores remained at about 70,000 MT, 12% up on last year even despite the fact that a lot of the coldstores (covered by the official statistics) lost 100% of their goods after the earthquake in March 2011. The total inventories of frozen and salted salmon products in Japan by early June 2011 amounted to 90,000 MT, nearly 15% up from less than 80,000 MT last year.

As for shipments from Chile, the general mood on the Japanese market is now under pressure due to the reports about a growth of frozen Chilean coho supply from the season 2010-2011 to 83,000 MT and frozen trout to more than 40,000 MT, as well due to expectations of a further growth of shipments of Chilean products in the future season.

Export of frozen coho salmon from Chile in 2010-2011

By the end of May 2011 direct export shipments of frozen coho salmon from Chile to Japan reached 48,000 MT, 33% up on last year, while the total volume of seasonal shipments from September 2010 practically reached 82,000 MT, nearly 13,000 MT or 19% up on the respective result of last year. The share of the Japanese market even in spite of more actively rising shipments to other directions (+61% to 12,100 MT) remained absolutely dominating at 87%, therefore the Japanese importers and users saw no grounds for concern as to reliability of shipments of frozen coho (the species winning leadership on the Japanese market).

Export of frozen trout from Chile in 2010-2011

The share of Japan in direct shipments of seasonal Chilean trout products dropped to 51% despite the Chilean export to Japan rose by 47% to almost 35,500 MT. The thing is that shipments of frozen Chilean trout to other directions jumped by 68% to 33,800 MT with sales to Russia more than doubling (+114%) to 12,300 MT.

At the same time, the Japanese market remained the only dominating direction for the Chilean trout fillets with the current share jumping to more than 84% versus to 20% though 12 months of 2010.

A boost of production volumes of farmed salmon in Chile (coho, trout, Atlantic salmon) give good prospects for a fairly quick rise of product supply for the Japanese market and a corresponding rise of shipments at appropriate prices.

Alaska pollock

The US harvest of feeding pollock in the east of the Bering Sea in the end of June- early July 2011 amounted to only 46,000 MT, 13% down on more than 52,000 MT harvested on the second full week of the season B. As compared to last year, the pollock harvest through the third fishing week rose again but by only 6%, while the seasonal quotas exceeded the last year results by 55% to only 740,000 MT (less quotas for fishery in the Gulf of Alaska and off the Aleut Islands).

Pollock catches and commodity production in Alaska as per 2 July 2011

Seasonal catch of US factory trawlers jumped by more than 70% and approximated the level of 50,000 MT in the first days of July 2011. In the meantime, the pollock harvest out of quotas linked to onshore processors increased by only 17% to 80,000 MT, while catches of motherships dropped by more than 15% to 10,000 MT. As a result, the total rise of catches amounted to only ca.10% with the harvest totaling 152,000 MT only. The quotas were covered at 20%, while last year the quota take-up by early July was already very close to 30%.

As for main pollock commodities, the output of pollock mince failed to reach the last year level and amounted to only 4200 MT by early July 2011. The output of pollock surimi (just like fishmeal) increased by less than 20% and failed to reach 15,000 MT, while pollock fillet production jumped by more than 35% to 21,000 MT. The output of headed pollock roared more than five times to ca.5000 MT.

By the beginning of July 2011 the situation with summer pollock roe grew more or less normal and the third week of the season (26.06.11-02.07.11) showed almost a 30% rise of its production as compared to last year.

Pollock roe

The Chinese import of frozen pollock and cod roe in May 2011 was much brisker than in April 2011, but only thanks to a dramatic boost of shipments of US products versus a decline of deliveries from Russia. The Chinese import of Russian pollock roe in May 2011 decreased by more than 31% on the previous month. In May 2011 the average price of Russian products imported to China hit record high since October 2010 and again reached the level of USD 12.00 per kilo which was registered in September 2010 last time.

Meanwhile, the average import price for the South Korea was limited to USD 10.00 per kilo even despite a 31% rise on April 2011. The average price of Russian pollock roe imported to Japan in May jumped by only 5% on April 2011 to ca.USD 9.50 per kilo (based on the average JPY/USD exchange rate). Nevertheless, as compared to last year the price indications for shipments to those main markets for Russian products were much higher, completely in keeping with the general results of seasonal sales at auctions in Pusan.

Import of frozen pollock roe to Japan, China and South Korea from Russia in 2010-2011

However, the difference in the price rise for shipments to those three directions in May 2011 still remained very noticeable. The average CIF price for imports to Japan in the month under analysis was higher than last year by only 7% in USD equivalent, while in JPY it was still lower than in 2010. As for shipments to the market of South Korea it was higher than last year by 41%, and as for shipments to China the rise was astounding as in May 2010 the average import price was extremely low and failed to reach even USD 1.00 per kilo. As compared to April 2011 the prices for Chinese import in May 2011 were 22% higher, and compared to March 2011 when traders started shipping products from the season of 2011 prices rose by 6%. According to some estimates, the level of seasonal import of Russian products to China and South Korea, and even to Japan in May 2011 was the highest, and in June 2011 and the months to follow it was expected to be lower.

As for the volumes of seasonal import, in the first three months of shipments (March-May 2011) it increased by 7% on last year, but still did not reach 20,000 MT (namely amounted to 18,900 MT). Not very active development of import of Russian products could be attributed mostly to a delay of direct shipments to Japan as the volume of the Japanese import turned out to be slightly (2%) lower than last year and totaled only ca.15,400 MT. At the same time, the volume of the Chinese import of seasonal products jumped by 45% to ca.1400 MT and import to South Korea rose by 49% to nearly 3400 MT (the level of shipments last year was reached only by early autumn or three months later).

The situation with shipments of US products from the A season was more difficult as the market specialists were only sure that those products were imported in May 2011 when the total import shipments to Japan, China and South Korea reached 7500 MT, almost 75% up on last year (the Japanese import grew even more, by 78% namely, to ca.6600 MT). The rise could be explained by a delay of seasonal sales from March to mid-April 2011 rather than by a production rise by much less than 10%. Most evidently, by June 2011 key markets for Russian pollock roe received only one half of seasonal production in Alaska with the remaining volume to be shipped in the summer months.