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

In the first ten days of October 2010 the most serious attention of market players dealing in seafood originating from the North Pacific fisheries has been attracted to the development of fishery operations on the grounds of Alaska pollock, saury and autumn chum salmon. In the current year 2010 the general dynamics of such fisheries has noticeably yielded to the last year trends, but as for the Alaskan fishery of feeding pollock the situation has unexpectedly turned out to be far from that before the start of October 2010, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

Pollock

The US fishery operations in the season A which should have finished already in the middle of September 2010 still continued in the beginning of October 2010 when they grew scandalous. More specifically, already in the middle of the closing decade of December 2009 the officially registered output of main commodities showed that surimi production was on a rise (though slightly), while production of fillets, headed pollock and roe was noticeably and even very considerably behind the previous year results. In the meantime, the reports of the National Marine Fisheries Service (USA) as per 2 October 2010 suddenly showed impossibly dramatic rise of the output, which could not but cause serious doubts either about the accuracy of data collection and methods of analysis or about the report makers' fairness.

On the week from 26 September to 2 October 2010 the surimi production was reported at ca.8700 tonnes, more than 10 times up on the result of the previous week, while the harvest itself jumped only by 35% to less than 7200 tonnes. The weekly production of fillets was shown at nearly 11,000 tonnes, while on the previous week it allegedly amounted to only ca.300 tonnes. The weekly production of headed pollock was reported at 17,800 tonnes versus only 1300 tonnes on the previous week, while the roe yield amounted to ca.850 tonnes, while in the previous three months of the season B it failed to reach even 1300 tonnes.

Judging by the Japanese sources, the above mentioned discrepancies in the US figures caused simply fierce and very badly suppressed response of the Japanese importers and users interested in shipments of surimi and roe. Quite evidently, such nonsense in production figures was very unpleasant for the European buyers of fillets as they also had to rely on the official reports while estimating the supply from Alaska. As for the Japanese side, even the most muted comments highlighted the strong wish to immediately improve the quality of the US reports. Exacting critics attributed the data imprecision to deliberate unreporting of actual catch rates and fraud, which was completely untypical for the official US statistics records.

The reason behind such a strongly negative response could be the fact that in the current season the Japanese side preferred to finish talks on conditions of surimi purchases from the season B approximately one month before the actual end of the season. Therefore, at the above talks the Japanese importers relied mostly on those estimates of seasonal production, which were based on the official production figures.

Pollock roe

On the first week of October 2010 Seattle hosted auction sales of frozen US pollock roe from the season B of 2010 as a result of which prices settled at a fairly low level. That was mostly connected with extremely weak activity of buyers, not only Japanese, but South Korean as well, and if the absence of strong interest in purchases of summer roe of US pollock from the Japanese market was fairly expected, the small number of South Korean buyers surprised many market specialists who thought that the South Korean side used the passivity of the Japanese side. On the other hand, the above mentioned market situation should not come as a surprise with the US export to South Korea until September 2010 going down by 17% on last year and even failing to reach 700 tonnes. The lack of serious demand for the summer roe from the US producers could be connected not only with the unwillingness to work with the raw material of problem quality, but also with a serious rise of shipments of the Russian raw of fairly high quality and at comparably low prices.

On the first day of auctions (on 7 October 2010) traders put up for sale only pollock roe produced from the raw fish harvested under the quotas linked to onshore processors. The total supply was limited to less than 400 tonnes, while the average prices were formed as a result of product sales of four companies, namely at 290-385 Yen per kilo or ca.3.50-4.70 USD per kilo. At the same time, prices for product lots comparably compliant with the normal quality level for the products from the season A and strict standards of the Japanese market were settled at the range of 580-660 Yen per kilo or ca.7.05-8.05 USD per kilo, which was only slightly below prices at the last year autumn auctions in Seattle.

On the second and closing auctions' day of 8 October 2010 the supply failed to reach even 300 tonnes, though sales were also conducted by four companies. The total volume of supply for the autumn series of auctions amounted to only ca.600 tonnes, even lower than expected, though the volume of seasonal production, judging by amended figures, turned out to be not so big as it could be estimated by the September figures.

On the same day onboard producers also put up their products for sale, which led to a fairly noticeable increase of prices. Average sales prices settled at 360-490 Yen per kilo or ca.4.40-6.00 USD per kilo, and prices for fairly small volumes of products of higher than average quality ranged at 630-710 Yen per kilo or 7.70-8.65 USD per kilo, approximately on a par with or slightly beyond on last year. Therefore the trend of the first day of autumn auction sales generally continued.

As a result of the above mentioned two days, traders sold only ca.600 tonnes of frozen pollock roe at the auctions, which was nearly 100 tonnes or 15% down on the sales volumes at autumn auctions of 2009. The average sales prices for the whole volume amounted to only ca.380 Yen per kilo (mostly CIF terms) or ca.4.65 USD per kilo, 9.5% down on last year. Taking into account that Yen exchange rate rose by 9-10% by autumn, the US producers succeeded in upholding USD prices at the last year level.

Saury

On the Russian saury grounds where some 35 fishing vessels were operating, the seasonal harvest amounted to 15,800-17,200 tonnes as per early October 2010, the Japanese side estimated the catch rates as big. According to the Japanese figures, the Russian harvest was dominated by small fish of up to 100 grams (some traders reported about even 70-80 grams, but that was an extreme point of view).

On the Japanese grounds for dedicated operations the fishermen harvested ca.55,000 tonnes of saury as per early October, evidently taking into account 18,000 tonnes harvested on the Russian grounds under the intergovernmental agreement. At the same time, the situation on the grounds grew much complicated due to instability of the situation and big remoteness of the fishing areas, as the ships had to move to the grounds sometimes for more than one day. However, the size structure was evidently much better than on the Russian grounds, at least the landings were dominated by saury of the weight ranging at 120-150 grams.

On the first week of October the landings grew noticeably brisker. More specifically, on 7 October 2010 the fishermen landed ca.5000 tonnes at all ports, and on 8 October 2010 the landings nearly reached 4000 tonnes. Mostly thanks to that the total volume of seasonal landings as per the above data amounted to 75,000 tonnes, however that did not result into a serious reduction of the gap from the result of last year because the seasonal harvest in the current year was still below the last year result which amounted to ca.147,000 toonnes or practically 50%. That reportedly helped hold the landing prices at a comparably high level due to which high prices remained in retail trade as well. In particular, in early October 2010 main supermarket chains conducted sales of fresh saury at prices somewhat lower than 100 Yen per fish, however prices mostly remained higher at 120 Yen per fish.

As for competitive fleets, a group of 75-80 Taiwan vessels was conducting fishery operations from the end of June and by the beginning of October 2010 (about three months) with the total harvest reported at only ca.80,000 tonnes, though in the end of September 2010 and early October 2010 the fishermen already harvested 15-20 tonnes per ship daily. The operations were conducted in the area at 4430 degree North and 16900-17000 degree East with the dominating fish size amounting to ca.120-150 grams. According to the Japanese side, frozen saury made by the Taiwanese producers was fairly actively shipped for processing to China at prices of 1250 USD per tonne (CAF China) for the lots of 100-130-gram products and 1350 USD per kilo of larger products (ca.130-150 grams).

As for the Japanese export of frozen saury, in August 2010 it was still developing very slowly, while last year its rates were already comparably quick and that fairly clearly reflected the situation on the grounds. According to the official figures, in August shipments to all the directions amounted to a little more than 100 tonnes versus more than 1400 tonnes last year and the average export price (FOB) amounted to nearly 160 Yen per kilo or ca.1.85 USD per kilo based on the average monthly exchange rate. In Yen equivalent it was practically twice higher than last year and the USD price jumped even higher, nearly by 125%, while the Yen exchange rate was much stronger than last year.

Main directions of shipments in August were China and Thailand, while in general through the period from the beginning of the year Russia remained absolutely main direction of the Japanese export of frozen saury. Through the period from January 2010 the Russian market received shipments of ca.40,200 tonnes, more than 85% of the total volume of the Japanese export of frozen saury which amounted to ca.46,700 tonnes, ca.37% up. Therefore shipments to Russia created grounds for the general rise of the Japanese export of frozen saury from the season 2009. The average export price on the Russian direction amounted to ca.80 Yen per kilo, more than 16% up on last year, in a situation of a very strong rise of shipments (last year as per late August the supply amounted to only 4300 tonnes, of which 400 tonnes were exported in August, therefore it was no exception that export was represented by products from the season 2009, which were very actively purchased by Russian importers and users).

Strongly slow development of fishery in the current season could cross out hopes of the Japanese frozen saury producers to consolidate their position on the Russian market, moreover even a very strong exchange rate of Yen could never be regarded a factor to encourage development of export. However, the Japanese producers and exporters still do not lose hopes counting on the fact that the Russian fishery could again get closed with the seasonal harvest staying at low level and the Russian canneries would again have to purchase the Japanese raw material with the use of connections made in the recent two years. Rise of actual purchase prices could hardly become a serious obstacle on the way of continuing active purchases, because the Russian market had its own peculiarities and due to fairly strong inflation producers and sellers could raise prices fairly seriously.

Calculations of the Japanese producers of frozen saury relied on the basis approximately similar to the basis to be also used by the Japanese producers of autumn chum salmon roe.

Salmon

Unlike a very slow beginning of the new season of inshore fixed seine fishery of autumn chum salmon in Hokkaido, the Japanese export of frozen salmon in August 2010 continued developing much quicker than last year. Most evidently, last year products were still shipped against the background of much lower than in 2009 level of carry-over inventories at main coldstores. The level of export prices was also higher than last year despite the fact that Yen to USD exchange rate was more than 9% higher than last year and amounted to 86-87 Yen per USD in August 2010 on the average. In this connection, such character of export development generally corresponded to the expectations of the Japanese producers and exporters who focused their plans mostly on stably strong activity of the demand from the Chinese processors. That could mean that a strong gap from the last year harvest and rise of export prices in USD caused by increased Yen exchange rate could in no way tell on progressing of autumn chum salmon export sales in the current season, though concerns on that matter still remained fairly noticeable.

The volume of August export of frozen chum salmon amounted to ca.860 tonnes, more than 70% up on last year, and the total export volume through the period from January 2010 grew nearly by 40% to ca.24,300 tonnes. The average export price (FOB) through the period under analysis appeared to be 5.5% higher than last year and amounted to nearly 230 Yen per kilo. In August 2010, directly before the start of shipments from the season 2010, the price was 33% higher than last year and amounted to ca.285 Yen per kilo, in USD it rose even more greatly, namely by 46% or more than 1 USD per kilo, and amounted to ca.3.30 USD per kilo. As for shipments to Thailand, it amounted to ca.320 Yen per kilo or nearly 3.70 USD per kilo, and as for shipments to China it leveled at 260 Yen per kilo or 3.00 USD per kilo, nearly 108% up in Yen and 128% up in USD.

Nevertheless, some market specialists still thought that it was too risky to count on continuation of active purchases from the Chinese market at high prices, therefore there were no guarantees that the Chinese processors would not suddenly change their positions. Those market experts said that the Chinese would most evidently continue purchases of gutted chum salmon at prices of about 300 Yen per kilo of products of mostly very high quality (in terms of meat colour and texture and even colour of skin). At the same time, active sales of products of ordinary quality at prices of about 230-250 Yen per kilo caused serious doubts because with even increasing exchange rate of Yen it would mean that prices for the Japanese raw material for the Chinese users could reach 3.00 USD per kilo (still taken as a very strong result).

On the other hand, some sources said that the Japanese processors working with autumn chum salmon quite seriously counted on the possibility of active sales of not only salted sieved roe, but also frozen sack roe of chum salmon to Russia. Such expectations were mostly based on the data that the volume of the Russian salmon harvest on the Pacific grounds nearly halved on last year and amounted to only ca.270,000 tonnes, and the harvest of pink salmon which is the main raw material for the Russian production of sieved salmon roe, was limited only to 170,000 tonnes. Besides, the expectations relied on the fact that the Russian market was strengthening due to fairly quick rise of consumers' purchase power and sales of such high quality product as salmon caviar made one of the basis for the activities of many fish companies.

According to very general and provisional estimates of Hokkaido producers, even with the cost price for fresh sack roe at 1600-1700 Yen per kilo or ca.19.50-20.70 USD per kilo, sales of frozen roe to the Russian market could turn out to be fairly profitable for the Japanese side and if not attractive, but affordable for the Russian side.

In the meantime, on the Japanese market supply prices of sieved autumn chum salmon roe from the new season started descending below the level of 3000 Yen per kilo already from the end of September 2010. In the first week of October 2010 prices for actual sales for products in soybean sauce leveled already at 2700 Yen per kilo, approximately equal to 33 USD per kilo.

In that connection many market specialists said that such level of prices for products from the season of 2010 was much welcomed by retail chains strongly interested in raising the general activity of sales thanks to active offers of roe from the new season. However, only a small number of producers could afford sales at low prices as they managed to purchase raw chum salmon at prices lower than usual, and the bulk of producers were at least greatly concerned by a price fall to 3000 Yen per kilo and even lower because on the first week of October 2010 landing prices for female chums at main ports practically never descended below 400 Yen per kilo and prices for raw chum salmon of high quality remained mostly at 450 Yen per kilo and higher (approximately equal to 5.50 USD per kilo).

Moreover, the fishery was progressing extremely unstably which not only restrained the decline of landing prices, but even encouraged emergence of an opposite price trend. Already on 7 October 2010 when the total volume of autumn chum salmon landings on Hokkaido declined to only ca.2500 tonnes, prices for females in spawning dress in the village of Rausu partly returned to the level of 500 Yen per kilo (higher than 6.00 USD per kilo), while in the neighboring Sibetsu they began approaching that level. On the following day when landings grew even more slowly prices for high quality females in Sibetsu reached the level of 530 Yen per kilo (or ca.6.45 USD per kilo). In Rausu prices for females were rising even more quickly and on 8 October 2010 prices even for silverside females exceeded 500 Yen per kilo and prices for females in spawning dress reached 565 Yen per kilo (ca.6.90 USD per kilo).

Thus, prices for females already started reaching and even exceeding the last year results, while in September and in the first days of October 2010 they declined by ca.7-12% on the corresponding last year figures. Evidently, in a situation of such a difficult situation with prices for the raw material it was really a challenge for the roe producers to agree with the requirements of the retail chains and with a price fall. The situation with landing prices for males was also fairly difficult, as those prices stopped declining below 200 Yen per kilo and reached 215-230 Yen per kilo (or ca.2.60-2.80 USD per kilo) even for the raw fish with evident spawning changes, and prices for the raw fish of selective quality began reaching the level of 450 Yen per kilo and even 550 Yen per kilo (quite unusual situation).

On the other hand, the position of processors was probably not as dramatic as that, because price indices for the raw fish continued traditionally forming at the moment of landing at ports of Kunashir Strait where in the current year 2010 there was practically most serious fall of activity of landings as compared to last year while on the Okhotsk coast prices remained more attractive for active purchases. As per late September 2010 the total volume of seasonal landings in the waters of Kunashir Strait was nearly 40% lower than in the season 2009 and amounted to ca.9000 tonnes. In the meantime, in the village of Rausu it went down nearly by 60% and on the Okhotsk coast landings remained practically not falling with the total volume of landings amounting to ca.23,000 tonnes. At the same time in the village of Abasiri (a well-known place for Sakhalin fishermen) it jumped by more than 40% to more than 6500 tonnes and in that port in early October 2010 prices rose by ca.360-400 Yen per kilo or ca.4.40-4.90 USD per kilo.

On 9 October 2010 the level of landing prices in Rausu and Sibetsu remained fairly high as landings grew slower again. In Sibetsu prices for females in spawning dress reached 550 Yen per kilo or ca.6.70 USD per kilo, and in Rausu they began stabilizing at that level and reached 580 Yen per kilo (or more than 7.00 USD per kilo).

As per 10 October 2010 the total volume of seasonal fixed seine catches of autumn chum salmon in Hokkaido on the inshore grounds amounted to only ca.80,000 tonnes, ca.18,500 tonnes or nearly 20% down on last year. Many local specialists grew quite sure that the situation as per the end of the season would hardly be good because it did not change for better in early October 2010. Thus, the total harvest by the end of the season was forecasted at only 120,000 tonnes (ca.80% of the last year result), slightly higher than in 2008, but 30,000 tonnes down on 2009 and nearly 40,000 tonnes down on the season 2007. The decline size was fairly serious, therefore market specialists were generally not surprised by dramatic changes of price trends, which happened during the first week of October 2010 when prices for females descended to the level of 400 Yen per kilo and then jumped to 500 Yen per kilo and more.