Overview of key markets for fish products from Russian and American Pacific fisheries as per mid-April 2010

On the second week of April 2010 the key markets for North Pacific seafood have remained focused on the pollock fishery progressing, though the fishing operations both in the US and Russian zones have already entered their final stage. At the same time, in April 2010 the seasonal pollock roe auction sales have evidently been peaking with all the main trends of the season growing distinct, according to the overview prepared by analysts of http://www.megafishnet.com/ (https://www.fishnet.ru/) based on Japanese and Russian sources.

Pollock

On the Russian grounds the fishing scene completely moved to the North Okhotsk subarea, where the catch rates were gradually declining from 7000 tonnes per day in late March 2010 to 5500-6000 tonnes in the first two weeks of April 2010. Such dynamics gave rise to doubts about estimates of the seasonal harvest of Okhotsk pollock forecasted to reach 900,000 tonnes as per 20 April 2010, even less catches in Sakhalin and Kuriles. Decreasing catch rates became good reason for the Japanese side to gradually change their estimates of the Russian production of frozen pollock roe in winter-spring season.

Some of the market specialists still thought it more sensible to count on the total offer at Busan auctions at least at 40,000 tonnes, while other traders rather decreased their estimates to 33,000-34,000 tonnes taking into account progressing of the Okhotsk fishery in the first ten days of April 2010 and some of them even recommended to count on even lower supply of less than 30,000 metric tons. The roe yield in the first ten days of April 2010 declined below 4% to ca.3.5% with the weekly production falling to 1400-1600 tonnes. Those figures actually hint that until the end of the season in the Okhotsk subareas which are of special interest from the Japanese market the pollock roe production will hardly reach the level of 35,000 tonnes, though by the middle of April 2010 the catch may approach the level of 850,000 tonnes.

As for headed and gutted pollock, influence of changes on the traders' estimates was still minimum, and the markets were completely sure that shipments of the Russian raw would in any case be very strong moreover practically all the products were shipped for export. That encouraged the Chinese buyers to hold prices for headed pollock 25+ much below the level of 1300 USD per tonne (mostly at 1275-1280 USD per tonne) and there appeared fairly grounded forecasts that already in the middle of the month when the supply would grow even more the prices would decline further to 1250 USD per tonne. Even for large headed pollock 30+ the prices were expected to decline to 1350 USD per kilo CAF, Dalian or Qindao.

The situation on the US fishing grounds in early April 2010 was fairly calm and there were quite true prospects of the season's practical closure at least by the middle of the month because in the first days of April 2010 the quota remainder went down to less than 25,000 tonnes (less quotas in the Aleut Islands which in the recent several years have been almost of no interest from the serious fish traders).

The average catch rates in Alaska in early April 2010 went down to 3000-3500 tonnes, even down on the results of the first half of February 2010, while in the closing week of March it was close to 6000 tonnes. The fishery development itself resembled that of last year but only with a delay by ca.7-10 days and, if the trend remained, the A season in the current year would definitely end up in between 10 and 15 April 2010. Last year the season was practically over by 4 April and in the following two weeks the formal catch was recorded at only 600 metric tons.

In the current year despite a fairly noticeable delay with the fishery development in the first three-four weeks of the season the gap in the seasonal catch went down in early April 2010 by only 2-3% to ca.9000 tonnes. Quite possibly the gap was covered by the beginning of the second week of April 2010, though in the middle of the month when the given report was written only official catch figures as per 3 April 2010 were available. According to the official catch records, the weekly harvest from 28 March 2010 to 3 April 2010 exceeded the last year result approximately 4.5 times and amounted to ca.22,400 tonnes, but the seasonal harvest was limited to 327,300 tonnes, ca.2.5% down on last year.

Thus, the seasonal harvest in 2010 approached the last year result which enabled the market analysts to evaluate changes in the structure of commodity products output moreover those changes turned out to be fairly noticeable.

The seasonal production of frozen pollock roe declined by more than 10% despite not very strong catch fall and amounted to only ca.12,600 tonnes. However, even such volume could be described as seriously exceeding the expectations because the provisional estimates based on the official data about changes in the age structure of the Bering pollock stocks hinted that the average yield of pollock roe through the season might descend to only 3.0% (in fact it amounted to ca.3.85%). As per early April 2010 the roe yield went down already to ca.2.5%, but even with such yield the total output by the end of the season could grow by another 600-700 tonnes of roe thus bringing the total production volume through the A season close to 13,400 tonnes, only 2000 tonnes down on the corresponding result of 2009. Although last autumn many traders spoke about a decline of US production by 4000-5000 tonnes. On the other hand, the level of quality was still comparably low, according to the participants of the first round of auctions in Seattle, while many traders expected the quality to rise thanks to growing share of pollock of young and medium age in the seasonal harvest.

Among other changes in the structure of commodity products the rise of surimi and H&G pollock production was worth noticing first of all. More specifically, the output of pollock surimi as per early April 2010 exceeded the last year result by more than 10% and amounted to ca.37,000 tonnes and the Japanese specialists practically did not doubt that the total result would be at the level of 40,000 tonnes, exceeding the last year result by ca.2500-3000 tonnes. The ratio of surimi output to pollock harvest fairly stably held at much higher than 11%, the harvest by the end of the season forecasted to rise by 4-5% which could provide for a rise of surimi output which had not been observed for many years.

Seasonal production of headed pollock in Alaska even after a dramatic slowing down of the catch rates in late March and early April 2010 greatly exceeded the last year result. The Japanese market specialists continue thinking that the products were meant for further processing into fillets mostly at onshore companies of Alaska (not for export sales), but that had not yet reflected in fillet production indices. The seasonal output of headed pollock in the beginning of April 2010 reached the level of 21,500 tonnes, more than 65% up on early April 2010. As compared to the total result of the A season of last year, it also rose though by 15% only, therefore the market specialists thought that by the end of the current year there would be serious changes both upwards and downwards.

In that connection very interesting changes were observed in figures on fillet production. While in late March 2010 the seasonal production of all fillet products was reported at more than 42,500 tonnes, in early April 2010 it decreased to a little more than 38,500 tonnes. At the same time, the general information update was carried out practically only on the basis of production data on deeply skinned fillets which as per early April 2010 appeared to be lower by almost 6000 tonnes namely amounting to less than 13,500 tonnes. The reasons behind such a serious update of the official data remained completely inexplicit thus making traders doubt about adequacy of such data on the US fisheries as well, while earlier only Russian catch reports had been far from actual (last year when headed pollock production data in Alaska in the recent two weeks of the season with minimum catch records were corrected upwards nearly by the same 6000 tonnes).

Despite the total volume of pollock fillet production in Alaska as per early April 2010 was recorded at ca.12% below the last year result, the market specialists did not hurry to give definite estimates. The total result of the current season could possibly reach the last year level of ca.47,000 tonnes and the rise of headed pollock production looked very large. Nevertheless, interest of the US producers in the fillet market was reported to be weakening. Probably, more or less clear idea about the real situation will be formed only after the end of seasonal shipments for export (in case with Alaskan fisheries it normally happens in May).

Pollock roe

On the second week of April the fourth round of seasonal sales of Russian pollock roe was conducted in Busan. Some market analysts initially had special hopes in connection with anticipated joining of the largest Russian producer of pollock roe (and pollock itself also due to the largest quota volumes) Polluks as regarded by foreign specialists, especially Japanese (sometimes they called the group Polluks/Okeanrybflot also including Koryakryba). Under some estimates that should either consolidate the trends emerging in the first three auction rounds or bring root to some new trends, but in any case the expectations did not come true as the company never started product sales which were were postponed, according to the Japanese sources, to the fifth auctions round on the third week of April 2010.

According to the market specialists, the fifth round of auction sales could become culmination of the first half of seasonal sales of Russian products which will last until the break for the Golden Week in Japan as it is planned to offer ca.5500 tonnes of pollock roe or ca.15-20% of forecasted seasonal output (in the course of the most active second round of auctions the supply was limited to only 4200 tonnes). It is no less important that the largest producer is expected to launch auction sales and immediately offer up to 4500 tonnes of pollock roe made by its large fleet of processing vessels.

Special interest to the results of the fifth round of auction sales in Busan was also caused by the fact that immediately after the Busan auctions the sales of US products would resume in Seattle. On the second round of auctions to be held in the start of the closing ten days of April 2010 the offer might reach the level of 8000 tonnes or ca.60% of the seasonal production. The market specialists were almost sure that the impact of the fifth round of Russian auctions in Busan on price positions of the Japanese and South Korean buyers at US product auctions in Seattle would be if not decisive, but at least very serious, however as per mid-April 2010 the markets could be guided only by the results of auction sales in the previous rounds.

The price results of the fourth round of auctions appeared to be very close to the results of the second and especially of the third round of auctions, although the total supply appeared to be comparably low at ca.1500-1600 tonnes, nearly two times down on the product volumes on offer at the third round of auctions. According to non-official figures, prices for products of quality affordable for the Japanese market leveled at 7.00-8.00 USD per kilo (mostly ex-coldstore Busan), while prices for products of high quality leveled at 9.00 USD per kilo.

Thus, before the fifth round of auctions for Russian pollock roe of more or less good quality fetched stable prices ranging at 7.00-10.00 USD per kilo, but in the course of the third and fourth rounds they did not reach 10.00 USD per kilo which the market specialists directly attributed to weakening of the exchange rate of Yen to USD in late March 2010. Some analysts thought that dramatic boost of supply at the fifth auction would lead to a price fall, though there were completely opposite forecasts based mostly on low estimates of pollock roe production on main Okhotsk grounds. According to such forecasts, the Japanese side would not be able to count on seasonal purchases of raw fish of appropriate quality even at 30,000 tonnes. In that connection May auctions 2010 were not regarded as promising, because, according to the Japanese specialists, the Russian producers would hardly risk to leave products with the storage life until mid-March 2010 as inventories, which could mean that in May 2010 there would be no comparably strong prices. Though in the recent years there were precedents when the latest auctions with more or less large offers unexpectedly attracted very active interest and prices settled at high level.

Surimi

In the middle of April 2010 fairly interesting information was published on import of crab sticks and other surimi-based products to EU, according to which along with a decline of surimi demand the demand of the European market in ready-to-eat products based on surimi also decreased. According to the official reports, the total volume of import of such products to 27 EU members from outside the Union went down by 10% to the level of seven years ago and amounted to a little more than 42,000 tonnes (in 2002 the import volume amounted to ca.42,150 tonnes). That actually happened in a situation when in the recent five years the Union considerably expanded with the new joiners of the Baltic and Eastern European States.

The average import price in 2009 rose by 5% to 2008 and amounted to ca.1.70 Euro CIF.

Last year main sources of shipments were China, Thailand, India and South Korea (in other words, all main Asian producers). Market shares changed fairly noticeably with import from Thailand decreasing by more than 20% to 12,500 tonnes, import from South Korea declining by more than 20% to 2000 tonnes and even import from China decreasing by 7% to a little more than 16,500 tonnes. In the meantime, import from India grew by more than 20% to ca.8800 tonnes. At the same time, prices for Indian products were not the lowest as the average import price CIF leveled at 1.60 Euro per kilo, and for shipments from China it was a little higher than 1.35 Euro per kilo. As for shipments from Thailand and South Korea the prices were much higher at ca.2.00 Euro per kilo.

Import inside EU member states also declined even more considerably, namely by 12%, and for the first time in the recent three years it descended below 30,000 tonnes to ca.28,500 tonnes. As for main sources, the largest decline of import was recorded for Lithuania (by 40% to less than 4500 tonnes) and France (by 27% to less than 3000 tonnes), while import from Belgium grew by 10% to 14,000 tonnes. The average price for import shipments from Belgium remained at the level of 2008 and amounted to a little more than 2.60 Euro per kilo, while for shipments from Lithuania it rose by more than 30% to ca.2.25 Euro per kilo. The average indications for shipments from France leveled at 3.00 Euro per kilo, nearly 15% up on last year and amounted to more than 3.40 Euro per kilo.

Salmon

Prospects for shipments of Pacific salmon to the Japanese market gradually grew more distinct. As usually, definite trends began showing with marine products in the Russian economic zone.

In the current year 2010 the auction for sale of quota shares for commercial operations for the Russian fishermen was held in late March and then in the end of the first ten days of April 2010 the agreement on the Japanese fishery in the Russian EEZ was signed. According to the official reports, the Russian fishermen got the right to harvest 16,000 tonnes of salmon with driftnet gear, the figure including 6000 tonnes of sockeye enjoying the strongest demand from the Japanese market. For the Japanese fishermen the sides agreed to allocate the total quotas of ca.8450 tonnes, including 3000 tonnes of sockeye. Last year due to various obstacles shipments of Russian salmon (from marine operations) to Japan were practically not registered at all, the Japanese market in 2010 could count only on a rise of shipments of Russian marine sockeye (of higher quality normally taken as standard) at exactly 6000 tonnes, because the sockeye quota for the Japanese fishery was left at the level of 2009. However, definite changes could be caused both by the fishery situation itself as well as by potential problems with quota payments quotas by the Russian fishermen.

As for the conditions for the Japanese fishing operations another interesting development was that the total quotas were quite unexpectedly increased (rather substantially) and that the above mentioned agreement was made comparably early thus creating extremely favourable conditions for the Japanese fishermen to enter the fishing grounds in the best time period to catch salmon in its highest possible condition. The total quota for the Japanese fishery was increased nearly by 23% or more than 1550 tonnes on last year (mostly thanks to chum salmon the quota of which was increased by more than 40% to 5100 tonnes), though in the recent years the Japanese operations were under too much fire from the Russian fishermen and patriotic and environmental organizations with doubts and discontent also coming from the Japanese side.

That (along with early signing of the agreement) built grounds for a conclusion that problems of the Japanese side with the sales of products from the fishery in the recent years were at least somewhat exaggerated and dissatisfaction with the results of sales was expressed mostly in order to press for concessions in terms of fees for fishing rights. Prospects for sales and market conditions were described by the Japanese fishermen as fairly favourable.

The official comments of the Japanese delegation on the results of talks could also highlighted that the general conditions for the marine salmon fishery in the Russian waters were improved due to a certain decrease of resource fees (in terms of quota volume). The fishery would therefore get started in due time and the Japanese side reached expansion of the fishing area accessible for the Japanese fishermen. The number of Japanese middle trawlers approved for operations in the Russian waters was increased by one fourth to 20 ships, the Japanese side could take it as favourable conditions for operations on more distant promising grounds.