Overview of key markets for fish products from Russian and American Pacific fisheries as per 3rd week of March 2010

In the 3rd week of March 2010 Alaska pollock fisheries in Russian and American waters were characterized by contrary developments. While the catch volumes on the Russian grounds in the Sea of Okhotsk started to decrease more noticeably, the US Bering Sea fishery accelerated again, reports http://www.megafishnet.com/ (https://www.fishnet.ru/) with reference to fishery sources in Vladivostok.

Such fishery dynamics attracted the attention of specialists and players on the market of main products but the strongest interest was caused by the mood and price positions of Japanese and South Korean buyers of APO roe, moreover at the beginning of seasonal sales there appeared concrete food for thought on the matter.

In this situation, it can be noticed that the price results of first sales in Pusan and Seattle can satisfy neither Russian nor US producers, though Russian producers are in a more advantageous position at least because the production volume of APO roe in the Sea of Okhotsk and on other grounds will be definitely high and thanks to that the financial results of the season will be more or less acceptable.

Pollock

Russian pollock catch in the Sea of Okhotsk in the first half of March 2010 amounted to ca.140,000 tonnes while the total catch of Alaska pollock including bycatch of other species amounted to 600,000 tonnes since the beginning of the year on the same fishing grounds.

In comparison with 2009 the catch increased almost by 40%, while the total quota-takeup did not break 60% level.

Taking into account slackening fishing tempos and decreasing daily catch rates to less than 9,000 tonnes by the end of the second decade of March, it is hardly feasible to harvest 800,000 tonnes by the end of March 2010, especially against the background of worse weather and ice conditions in the West Kamchatka subarea where the main fishing efforts were concentrating. Active transshipments of products also affected the fishing process but the yield of APO roe in the Kamchatka-Kurile and the North Okhotsk subareas stayed at 5.5% that regardless relatively low production level in the West Kamchatka subarea secured adequate tempo of frozen roe yield at relatively high levels.

Closer to mid-March 2010, catches on the American grounds grew at a rather rapid pace again but both the weekly harvest and the harvest in the second week of March 2010 came to be lower than last year. So far this year only the last week of February showed better results on respective figures of last year. Nevertheless, the fact of a dramatic rise of the catch rates by mid-March 2010 attracted the attention of interested parties as theoretically it could lead to a larger supply during the first auction rounds of frozen APO fillets in Seattle.

As per the second week of March 2010 the total volume of the US pollock catch in Alaska increased more than twice in comparison with the first week of the month and reached the level of 47,500 tonnes at the expense of the main Bering Sea fishery (by 45% to ca.40,000 tonnes) as well as Alaska Bay one (by almost 115% to 7,600 tonnes).

However last year, when the US fishery reached its peak in season A also in March, in the second week of March they harvested almost ¼ more. In other words, in general the situation in the current year stayed at notably low level if compared with last year results.

The total US pollock catch by mid-March 2010 only came closer to the level of 220,000 tonnes and the seasonal TAC was covered at ca.62%, while 268,500 tonnes were harvested in 2009 and quotas were covered at almost 80%. The difference is quite notable though there are still some hopes that the catch rates in the second half of March 2010 and in the beginning of April 2010 will accelerate and surpass the previous year results and the seasonal catch will at least remain at the same level with season A figures (around 338,000 tonnes).

As for the yield of main product categories, roe production decreased notably despite increasing catch. Some market specialists assume this happened because the level of yield grew more normal against the background of active running of Alaska pollock of the most productive age but the decline was too dramatic for the official data to be objective.

The total volume of roe production in the second week of March 2010 amounted to only about 1,500 tonnes, more than 10% down on the first week of March while the roe yield amounted to only 3%, down from the first week of March when it notably exceeded 5%.

It can be noted that the formal indicator of yield (calculated from the APO catch and roe yield) for mid-March 2010 is extremely low while for the first half of March 2010 (even taking into account high results of the first week of March) the total roe production amounted to about 3,500 tonnes while the roe yield figures broke only 4% level that was evidently not enough for the pre-spawning period.

Total seasonal APO roe in the American fishery by mid-March amounted to 8,200 tonnes, 24% (ca. 2,600 tonnes) down on the same period of the year 2009 and if continued with the same tempo the season A's production will not exceed 12,000 tonnes. According to other more optimistic estimates, the seasonal production is likely to come to the level of 13,000 tonnes or even 13,500 tonnes. At the same time, cod roe production since the beginning of the season increased almost by 20% amounting to ca.4,300 tonnes.

Approximately as notably fillet production decreased, while mince production declined less considerably and surimi and fish meal production went down even less remarkably. Headless and gutted Alaska pollock production grew seriously if not to take the second week of March 2010 when head-off and gutted APO production was down from the previous year level.

Weekly production of headless Alaska pollock amounted to ca.3000 tonnes, up from the first week of March 2010 by almost 80% but down from the previous year level by 1%. Nevertheless, the seasonal production by mid-March 2010 grew from the last year result by almost 60%, amounting to about 15,000 tonnes.

Nothing is reported about possible ways of selling American products (according to some sources, part of it will be sold to onshore fillet processors), as for the Russian products sales (the volume of Russian production came to the level of 300,000 tonnes), by mid-March 2010 the prices are reported to decline to USD 1,300-1,350 per tonne (CAF, China).

Weekly production of all fillet products grew by more than 1,000 tonnes reaching the level of 5,000 tonnes, still almost 20% down on last year. By mid-March 2010 seasonal production only approached 27,000 tonnes but decreased by more than 19% or 6,500 tonnes in comparison with 2009.

Weekly production of surimi increased by ca. 35% amounting to 5,300 tonnes and almost equaling the figures of the second week of March 2009. In its turn, seasonal production exceeded 24,200 tonnes but came down by 8% in comparison with the year 2009. That somehow chilled Japanese producers who in their turn stopped expecting another dramatic collapse of APO surimi production in Alaska.

Weekly production of fish mince and fishmeal exceeded the corresponding results of last year. However, while seasonal production of mince by mid-March 2010 decreased by around 11.5% on last year to almost 5,500 tonnes, reduction of seasonal fish meal production amounted to less than 5% with the production indices by mid-March 2010 leveling at 7,500 tonnes. Meanwhile, as per mid-March 2010 seasonal catch decreased by 18.3% on 2009 to ca.219,300 tonnes.

Pollock roe

Dynamics of APO catch and production of main commodities on both American and Russian fisheries caused serious interest of market players, focusing their attention mostly on the process of seasonal price formation of frozen APO roe, and the beginning of the second part of March 2010 gave enough objective material to make concrete conclusions. According to the market players, auction sales of Russian products in the first week of March 2010 were only the first stage of the sales season while the first round of sales of American products in Seattle meant the switch to the main phase of seasonal sales. The results of the first two days of the round showed that concerns about a potential price decrease as compared to low prices of products from the A season of the year 2009 appeared to be quite reasonable.

There was no authoritative information about progressing of auction sales of Russian pollock roe in Pusan in the third week of March 2010 (according to some sources, auctions with total volume on offer at 4,500-5,000 tonnes were conducted on 23-25 March 2010), but the general mood was pessimistic because, on one side, the volume of offers increased almost twice and a half in comparison with the first round of auctions and, on the other side, price results of the first round were drastic (the highest price amounted to Y750.00 per kilo/ca.USD8.30 per kilo but only for small consignments of first-grade products while the bulk of offered products was sold at Y500.00 - 550.00 per kilo or ca. USD6.00 per kilo. Some of the consignments were sold at USD5.00 per kilo and less and buyers' position at auctions in Seattle could not but arise concerns.

The first round of auctions in Seattle started on 16 March 2010 from examination of products of two companies Icicle and Peter Pan, but only Icicle Company arranged the auction the next day (usual practice), while the Peter Pan Company put it off for the coming days.

During the first auction on 17 March 2010 the offer of onshore products (made by one laid up factory ships receiving the raw material from fishermen) amounted to ca.180 tonnes (approximately 50% of the volume was contributed by standard mature REG roe or mako roe while the other 50% was of relatively low quality roe including overmature roe in large and very large sacks).

The quality of offers reflected, as reported, the real picture of fishing in January and February 2010 when fishermen had to target only old and large pollock waiting for runs of main spawning schools.

Prices of standard roe varied from Y735.00 to Y765.00 per kilo with an average price amounting to Y750.00 per kilo or about USD8.35 per kilo, almost 17% (Y150.00 per kilo) down from the first round of the auction of season A 2009.

One of the consignments of overmature roe of more or less good quality was sold at Y470.00 per kilo and a much larger consignment of roe of the lowest quality was sold at extremely low price of Y200.00 per kilo (USD2.2 per kilo), so the average price of all offered volume amounted to only Y509.00 per kilo (CIF Japan or South Korea), almost 30% or Y215.00 per kilo down on the average selling price in the first round of last year sales.

Analyzing the results of the first in this season auction of American products, market professionals pointed that it was quite reasonable to expect many of the Japanese buyers to form their bid prices for products from the A season 2010 taking into account the results of autumn auctions in Seattle where the sales were focused on products from the B season 2009 and even prices of standard onboard products amounted to only Y650.00-700.00 per kilo while standard products of onshore sector were sold at Y600.00 - 650.00 per kilo.

The situation when prices of "summer" roe became the starting point for setting prices of products of season A was not quite usual but it reflected developments on the market of ready pollock roe in Japan when only low price became effective means to secure active sales seriously limiting financial opportunities of finished products manufacturers in terms of buying frozen raw materials.

The auctions held on 18 March 2010 with much larger volumes of offered products confirmed the inclination the Japanese buyers to push down prices for the raw material from Alaska. That day they also offered products of onshore sector while the share of roe produced onboard and sold only by Trident (American Seafoods Company put off the auction to 19, March 2010) amounted to less than ¼ from the total volume of more than 1,500 tonnes but the tendency was quite obvious moreover the prices of onboard roe did not stay at the last year level. Despite the roe offer went down in comparison with the first round of the previous year auction by almost 45% and did not even reach 400 tonnes (products of 3 factory ships from two fishing trips were offered) it should be noted that 50% of standard roe prepared for the first round was left for sales during bilateral negotiations but this has been a usual practice of recent years for sales of this company. The average selling price amounted only to Y742.00 per kilo (ca.USD 8.20 per kilo), more than Y350.00 per kilo or by 32% down on last year, while the average price of standard (STD grade) roe fell by 26% or Y355.00 per kilo to Y1026.00 per kilo (ca. USD 11.35 per kilo). The average price of other products decreased by 31% or Y217.00 per kilo to only Y476.00 (USD 5.25) per kilo and one of the consignments was sold at a price lower than Y155.00 per kilo level.

According to the market players, the auction prices of non-standard roe which share in the total volume of products on offer was unusually high for the A season, appeared to be extremely low (some of the consignments was sold at Y100.00 - 200.00 per kilo). That seriously affected the total results of sales especially of onshore sector products which were sold by such leaders in this sector as Westward Company, Alyeska Company and Unisea Company. Average selling prices that day varied from Y460.00 to Y620.00 per kilo (USD5.10-6.85 per kilo while the main volume (around 830 tonnes) was sold at an average price of about Y550.00 per kilo (ca. USD6.00 per kilo).

Decrease of the average selling price in comparison with last year amounted to Y155.00-365.00 per kilo, the largest fall was observed for the products of one of the plants working on raw material harvested in Alaska Bay where the catch rates grew by 15%, while the smallest price fall was reported for products of Unisea Company which had begun to process spawning Alaska pollock later than other onshore producers and consequently offered only around 230 tonnes for sale in the first round of auction.

Prices of standard onshore-made products harvested in the Bering Sea reached their peak of Y820.00 per kilo (ca. USD9.05 per kilo) while the lowest level (excluding products from raw material harvested in Alaska Bay) amounted to Y650.00 per kilo (ca.USD7.20 per kilo). Prices of standard products manufactured onboard from one of consignments of volume around 50 tonnes reached the level Y1150 per kilo (around USD 12.70 per kilo) while their lowest limit amounted Y960.00 per kilo (USD 10.60 per kilo), in other words totally they are notably higher than the prices of shore-processed products, as for non-standard products (immature and overmature roe, roe in damaged sacks, in sacks with gall spots etc.) the prices of such products had not varied much and amounted to Y360.00 - 640.00 per kilo (USD4.00 - 7.10 per kilo).

On 19, March 2010 auction sales of shore products of Trident Seafoods Company with offered volume amounting to 820 tonnes had even weaker results. Average selling price amounted to only Y461.00 per kilo (ca. USD5.10 per kilo) ex-coldstore Funabashi, down more than 40% (around Y325.00 per kilo) from the prices of the first round of auction in season A 2009. However, average prices of standard products (the offered volume amounted to 330 tonnes, twice as low in comparison with the year 2009) fell by 27% amounting to Y707.00 per kilo (USD 7.80 per kilo). More than 200 tonnes of products were sold at the level of Y200.00 per kilo and less, about 150 tonnes of products were sold at Y300.00 - 330.00 per kilo, such low prices in the situation of large volumes of products of low quality affected seriously the total result.

Last two days of the first round of auctions were focused mainly on the products of onshore manufacture but the increase of prices expected by some market players did not occur, that allowed to speak about continuation of the tendency started during the first seasonal auctions. Average selling price offered by ASC Company on 19, March 2010 reached the level of Y1000.00 per kilo (ex-coldstore, Pusan) but only because the sales of low quality products were postponed to the other day. Average price for the low-quality products did not exceed the level of Y420.00 per kilo.

Average selling price of mothership Golden Alaska (which has been leading in price in recent years) amounted to only Y712.00 per kilo (around USD7.90 per kilo), although the offered volume was at least 60% less of the same round of the previous year. The price decrease exceeded 45% level in many cases because the share of standard roe amounted to less than 60% of offered volume (less than 150 tonnes), though the average price of standard products of the same manufacturer kept the leading position amounting to almost Y1200.00 per kilo. The largest level of prices of standard products was reported to be offered by factory ship Alaska Ocean and amounted to Y1253.00 per kilo (around USD13.85 per kilo) while the average selling price amounted to ca.Y890.00 per kilo (USD 9.80 per kilo), down 24% or Y280.00 from last year level.

It can be noted that in recent years the Japanese importers buying Russian products clearly specify their position on prices of onshore produced roe from Alaska. The first seasonal auctions in Seattle proved keeping of the tendency and Russian producers cannot overcome the situation yet although the quality of Russian products in the current year in general can be higher than the Alaska-based one. One cannot exclude the situation when those Japanese importers who could not have secured the necessary volume of raw material of more or less high quality in Seattle, would be active in Pusan contributing if not to increase of prices then to stability of prices of Russian products without any serious decrease of prices during the season.

Salmon. More or less late figures of official Statistics of China show that the Chinese import only of Russian salmon of season 2009 (excluding sockeye supplies) amounted to ca. 78,400 tonnes, up 235% or 55,000 tonnes from the figures of import of fish products of season 2008 in July-January 2009. Before the new season starts in July this correlation is not like to change much, because in February-June last year it was reported to be imported less 700 tonnes of products only.

These figures obviously show that Chinese processors fully used record catches of Russian pink salmon in 2009, dramatically expanding the offers and price decrease (during peak sales in autumn average import price amounted to about USD1.75 per kilo vs more than USD1.95 per kilo last year, while in January the price amounted to 2.60 per kilo with import volume achieving only 120 tonnes). But Chinese processors were interested not only in Pacific salmon of Russian origin but American and Japanese as well. This probably prove general increase of attention to this raw material if there are strong prospects to sell fillets and other processed products on developed markets (USA, Europe, Japan).

By the end of January 2010 the volume of seasonal import of Alaska salmon (mainly pink salmon and chum salmon) achieved the level of 48,000 tonnes, increasing by almost 60% or 17,600 tonnes in comparison with last year results. Import of Japanese raw material (mainly chum salmon of autumn fishery 2009) amounted almost to 30,000 tonnes by the end of January 2010, up 95% or 14,600 tonnes from the previous year figures. Total Chinese import of frozen Pacific salmon in August - January 2010 amounted to 162,000 tonnes (including farmed coho salmon from Chile), that is nearly 120% or 90,000 tonnes more than the import volume of the products of 2008 season.

Some market players anticipate that inventories of products season 2009 can weaken the interest of Chinese buyers in products of season 2010. Probably, these fears are quite reasonable but yet Chinese buyers are hardly to increase purchases such large until they are sure in good prospects of selling of processed salmon.