Overview of key markets for fish products from Russian and American Pacific fisheries as per 1st week of August 2010

As per the 1st week of August 2010 latest reports on Russian salmon fisheries were not yet available and the reports on sockeye fishery development in the North America showed that the catch volume in that part of the Pacific Ocean could remain at least on the last year level, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

As per 9 August 2010 the volume of sockeye catches in Alaska practically reached the level of 40 million fish, only 2.5% down on the import volume as per the same day of the last year season. On the sockeye grounds in the River Frazer (Pacific coast of Canada and USA) the fishermen harvested already ca.0.3 million fish as per 6 August 2010 (only 82,000 fish were harvested by commercial fishermen). At the same time, the total volume of seasonal sockeye catches exceeded the result of the last year season already by 13% (in 2009 the result was only 1.5 million fish namely). High water temperatures in the areas of fish runs (19-20 degrees C) continued causing rising concern of local scientists as for quality of spawning fish runs, but so far the general activity of spawning runs made the fishermen happy.

On Alaska grounds of chum salmon the seasonal harvest by the end of the first week of August reached the level of 13 million fish, 5% up on last year. The harvest of pink salmon in Alaska amounted to ca.48.4 million fish, nearly 14% up on last year. Thus, in the first half of the season, despite the lean year fishery development scheme, the general situation on the grounds was much better than last year, and that could provide both a rise of frozen fish production for sales to China and production of sieved caviar and other caviar products for export to Europe.

The volume of Chilean export of frozen coho salmon to Japan in the first half of the year amounted to ca.36,500 tonnes, nearly 10,000 tonnes down on last year, but in general through the period of shipments of products from the season of 2009-2010 by the end of June 2010 it practically reached the level of 70,000 tonnes (for the period from September 2010) and rose by more than 4000 tonnes.

The volume of shipments of headed and gutted trout to Japan in the first half of the year declined by 33% and failed to reach even 18,000 tonnes. At the same time, its export volume to Russia jumped more than twice and reached the level of 6000 tonnes. In June export to Russia already exceeded the export volume to Japan, namely nearly by 15%, and amounted to ca.1900 tonnes. In this connection, it was noticed that by the end of summer the general forecasts for the season dramatically changed. More specifically, while in the beginning of the year few market specialists doubted that with all possible market changes Japan would remain the leading direction for Chilean export of headed and gutted trout, already in the beginning of the year most of them forecasted that by the end of year Russia could step forward as the main direction against the background of actively developing shipments to Russia.

However, far from all traders agreed with the above opinion as in July and in the beginning of August 2010 the exchange rate of Yen strengthened so much as the positions of the Japanese buyers looked simply solid. Nevertheless, under the influence of very strong competition from the Russian market the Japanese importers had to agree to increased purchase prices (CAF) for Chilean trout to 7.00 USD per kilo of large sizes and up to 6.70-6.80 USD per kilo of medium size trout. So far a very strong exchange rate of Yen let the importers leave their prices for industrial users at 650-700 Yen per kilo, but if the exchange rate went down, it would be a challenge for the importers both to contain a price rise in Japan and support activity of purchases at so high prices.

On the other hand, the Japanese side did not yet have big problems with activity of purchases of trout fillets in Chile. In May and June 2010 the volume of monthly shipments noticeably exceeded 5000 tonnes, while last year they were much below the above mentioned level, and the total volume of export in the first half of the year exceeded the last year result nearly by 10% and reached the level of 15,000 tonnes.

Pollock roe

After publication of official figures of Chinese frozen roe import there also appeared real grounds for more or less accurate estimates of the general volume of shipments of frozen pollock roe of the Russian origin to main directions.

In June 2010 the total import volume of Russian products to Japan, China and South Korea amounted to ca.5350 tonnes, ca.2100 tonnes down on May 2010 and as compared to last year the June import to those directions declined practically by 40% or 3400 tonnes. However, such a serious decline of the June import was actually due to the fact that in the current year 2010 active sales of Russian products began approximately one month earlier than last year and correspondingly in May 2010 the volume of supply at auctions in Busan was already not so big.

In the current year only in April and May 2010 the customs of those three countries cleared nearly 16,500 tonnes of Russian products, more than 80% up on the import volume in April and May 2009. In general, through the period from March to June 2010 when the customs cleared practically products from the season of 2010, the total import volume amounted to ca.24,300 tonnes, more than 30% up on last year and 40% up on the import volume in March-June 2008.

However, distribution of shipments among those main directions turned out to be at least not the same as in the previous two years, mostly because import of the Russian raw to Japan grew brisker very quickly. As compared to last year (from March to June 2009) the Japanese import grew by 57% and by 38% as compared to the result of two years ago and reached the level of 20,600 tonnes. At the same time, import to China jumped by 45% on 2008 and went down by exactly one third on last year and amounted to ca.1200 tonnes. Import to South Korea amounted to slightly more than 2500 tonnes, nearly 60% up on 2008, but declined nearly by 30% on last year.

Full scene of distribution of seasonal shipments of Russian products as per the end of June was not yet clear as ca.7000 tonnes of products from the season of 2010 were not cleared at customs of those three countries. However, still the general trend for the season was already quite evident with the Japanese side being strongly active in purchases of Russian raw fish at auctions in Busan against the background of extremely unfavourable conditions with purchases of frozen raw fish in Alaska (both in terms of supply volume and quality). At the same time, the Japanese traders succeeded in avoiding a price rise partly thanks to stronger exchange rate of Yen to USD (in the current year in the period of the most active development of seasonal import the average import price formed at 770-810 Yen per kilo, while last year prices ranged at 750-1020 Yen per kilo). In the above mentioned situation the remaining traders had to make room, those also included the Chinese processors, but probably the level of shipments of the Russian raw fish from the season of 2010 in the following several months did not recover yet and exceeded the level of 2008-2009 which was not high (the volume of annual shipments amounted to 3400-4200 tonnes).

Cod

The summer-autumn season of longline cod fishery in Alaska in the eastern part of the Bering Sea opened only in the middle of August, but already in the first week of the month the Japanese exporters received first specific price offers for shipments of products from the B season.

The Japanese specialized sources said that Japanese side received quotations for main fish sizes at 3.65 USD per kilo (frozen H&G products of the 1st grade CAF Japan). That was practically exactly in keeping with the price level at which the Japanese importers purchased Alaskan products from winter-spring season A. Therefore, it was no surprise to receive reports that some of the Japanese importers already made contracts on products from the season B.

The market specialists however notice that the Japanese importers had no need to hurry with making new contracts. In this respect it was no wonder when some importers were going to take breathe and wait for clearing up of the situation with European purchases because if activity of purchases from the EU market was not so high, the Japanese side would have quite real chances for making contracts at more profitable conditions. On the other side, at present the Japanese side already has fairly favourable conditions provided by the very strong exchange rate of Yen to USD.

According to some estimates, purchases at prices leveling at 3.65 USD per kilo make the decline of their bid prices for industrial users to 360-370 Yen per kilo (versus nearly 400 Yen per kilo of American products from the A season 2010 offered on the Japanese market) not a heavy burden for the importers.

As for the general prospects for the season B of longline Bering Sea cod fishery in Alaska, the official remainder of the annual TAC after the season A amounted to only 36,800 tonnes. However it was quite clear that the opportunities for freezer longliners would be much higher, because in the current autumn the total TAC remainder would be redistributed (probably even more than one time) to the benefit of the longline operations at the expense of trawl and trap quotas. Nevertheless, hardly even after the redistribution the total quota for the season B for that group of the most actively working fishery participants would reach the last year allocation of 44,500 tonnes, because the TAC was cut down as compared to last year.

The Japanese importers said that in connection with the launch of the new system of per ship distribution of capture quotas for freezer longliners those companies which controlled several vessels decided to decrease the number of longliners sent to the grounds in autumn. According to the importers, the total decline of the fishing efforts could reach 25-30% and for the first time in the last several years the Bering Sea cod would be harvested by less than 30 freezer longliners, down from nearly 40 in the current winter. The market specialists said that the decline could directly reflect on the general character of purchase operations in Alaska because after such a large scale decline landings would not be so much concentrated which would most evidently make the producers' positions stronger. Partly the above factor was also taken in account by the importers in signing seasonal contracts before the official opening of the season B.

In the first half of the year Japan imported ca.5250 tonnes of US products (mostly Bering Sea longline cod), ca.17% or 1100 tonnes down on the respective result for 2009. However, the total volume of import shipments of frozen cod declined only a little less than by 500 tonnes or 8% to ca.6300 tonnes (in the first half of the year at least 22,500 tonnes of cod were harvested on the Japanese grounds, at least 40% up on last year, and the average landing price declined by 11% to less than 170 Yen per kilo. In June it even made only 127 Yen per kilo or less than 1.40 USD per kilo).

That was possible only thanks to the fact that the import volume of the Russian products rose nearly by 120% to 1000 tonnes. Such a serious rise of shipments of frozen Russian cod could be attributed to stabilization of prices at much lower level as compared to shipments from the USA. The average import price CIF Russia for the first half of the year failed to reach even 250 Yen per kilo, 4-5% down on last year (approximately equal to the rise of the Yen exchange rate) and the average price for imports from the USA rose by 11-12% to ca.315 Yen per kilo. While last year prices for the Russian shipments were approximately 10% below those for Alaskan products, in the current year they appeared to be already more than 20% smaller, and that was quite important for the users with not very serious financial capacities.

Atka mackerel

According to the Japanese market specialists, recent decisions of the US authorities aimed at strengthening measures on conservation of sea lions' populations in the Aleut Islands could negatively reflect on prospects for production of frozen Atka mackerel in Alaska and simultaneously give the Russian producers more profitable positions in terms of sales to the Japanese market.

In the meantime, in the first half of the current year shipments of Russian products were already more active than those of Alaskan products, the activity of shipments in the second quarter of the year being especially high and the import volumes gradually increasing to the record high level (probably, only interim) in June. In April 2010 the volume of import from Russia rose by more than 60% through the month and exceeded 2500 tonnes, in May 2010 it grew by another 8% to ca.2800 tonnes, and in June 2010 it jumped by another 14% to ca.3200 tonnes. At the same time, already in May 2010 the import volume from Russia appeared to be slightly up on the import volume from the USA and in June 2010 it exceeded the import volume from the USA approximately six times.

By the end of the first half of the year import of the Russian products to Japan reached the level of 14,000 tonnes, nearly one fourth up on last year and more than 3% up on the import volume of Alaskan products. In the meantime, import from the USA in the first half of the year declined nearly by 20% or ca.3000 tonnes to 13,600 tonnes. Even by the end of the year the import volume of Atka mackerel from Russia could turn out to be higher than import shipments from Alaska while last year import from the USA was higher than that from Russia by nearly 70% and amounted to ca.36,500 tonnes. In 2008 it was nearly 75% higher and amounted to ca.34,700 tonnes. In terms of price results, shipments of Russian products also took the first place, the average import price in the first half of the year rose by more than 10% and reached 230 Yen per kilo (approximately 2.50 USD per kilo), while the average indications for shipments from the USA remained on the last year level of a little more than 215 Yen per kilo.

In July 2010 shipments of Russian products were also comparably active though normally the level of quality of summer products was fairly low. According to some market specialists, it could seriously complicate progressing of sales, moreover in September 2010 landings in Alaska should grow brisker and already from October 2010 the import volumes from the USA to Japan should dramatically increase.

Crabs

Prices for frozen crab in the USA remained very high, and the situation on the US market exerted a great influence on the financial positions of the Russian producers, especially law-abiding.

By the end of July prices for king crab on the market of New York, where traders sold processed products (leg sets) and price results of sales could be used as the general indicator of the situation on the US market, prices for medium and small crab of the counts 14-16 and 16-20 per 10 pounds (4.54 kilos) rose to 11.75 USD per pound and 11.45 USD per pound correspondingly (ca.25.90 USD per kilo and 25.20 USD per kilo respectively). Through July 2010 the level of prices for those counts rose by ca.12% with the product range dominated by Pacific products of the above mentioned counts.

As for large crabs of the count 9-12 per kilo, prices in July 2010 rose even more greatly, by 15% namely, to 14.65 USD per pound (ca.32.25 USD per kilo). Such a quick rise of prices became the most noticeable consequence of the active demand and limited supply. However, the limited supply could be also described by the fact that official quotations in July were published only for two or three out of six main articles.

At Boston fish exchange where the price indicator for frozen snow crab forms, prices for Canadian snow crab opilio salted in brine in July 2010 (for the smallest count of 3-5 ounces (87-145 gram sections) rose by 13-15% and by the end of the month strengthened at a very high level for small opilio, namely at 4 USD per pound with prices ranging at 4.15-4.25 USD per pound (approximately 9.15-9.35 USD per kilo). As for the most popular count of 5-8 ounces (145-232g) prices in July 2010 rose by another 8-10% and approached the level of 5.00 USD per pound, entering the range of 4.75-4.85 USD per pound or ca.10.45-10.70 USD per kilo. The price rise continued in the second half of July while for large sizes (from 8 ounces and from 10 ounces) the price rise got halted.

Prices for those counts settled at the range of 5.20-5.25 USD per pound and 5.50-5.65 USD per pound (correspondingly equal to 11.45-11.55 USD per kilo and 12.10-12.45 USD per kilo). The market specialists thought that quick rates of price rise for the counts L and M were due to the fact that prices for large snow crab opilio already reached unusually high level for the users and a large number of users fearing sales problems started to switch to cheaper products.

Some market specialists thought that the current prices were already riskily high for the market stability, because they did not comply with the indications in the recent years. Besides, the situation with the shrimp fishery in the Gulf of Mexico was getting normal and with the rise of shrimp supply traders in opilio would find it more difficult to keep prices from falling. Similar concerns also touched the situation on the red king crab market. Nevertheless, the general situation for frozen crab producers still remained fairly favourable. At least, partly due to the influence of strong market situation in the USA prices for the Japanese purchases of cooked and frozen red king crab from the grounds in the western part of the Sea of Okhotsk (area of Shantarsk Islands) rose to the level of 20.00 USD per kilo of the count M, and prices for frozen snow crab opilio from the Sea of Okhotsk (CAF Busan) for cooked and frozen products salted in brine reached the level of 10.00 USD per kilo (30-kg carton) and prices for air frozen products reached 11.30 USD per kilo of cooked-and-frozen snow crab opilio (5-kg box) and ranged at 10.50-10.80 USD per kilo of raw frozen products.