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

In mid-November 2010 even more signs appeared that pollock quotas 2011 in Alaska could be seriously increased. If such decision is taken at the December meeting of the Fishery Regulation Commission the rise of the US pollock harvest will be inevitable, which can lead to weaker situation on the market of headed pollock and pollock roe, but so far the condition of those markets does not show changes in the situation on the pollock grounds, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

Pollock

Published on the first week of November a forecast on potential pollock catches in Alaska assured the market specialists that the US quotas 2011 could be considerably increased. More specifically, the forecast provided for nearly a 56% rise of biologically allowable catch to 1.267 million tons (less capture quotas in the Alaska Bay). Therefore, as per mid-November 2010 a considerable rise of quotas was taken as the most probable though not to 1.25 million tonnes, as the TAC 2011 would hardly be equal to the biologically allowable catch.

The rise of pollock quotas in Alaska would most evidently lead to a strong rise of shipments to the world market both of pollock surimi and pollock fillets. Market specialists think that if the production rise in Alaska is not backed by serious activation of demand for pollock fillets on the European and North American markets, the decline of fillet prices will become inevitable which will lead to a fall of prices for gutted Russian pollock. However, as per the second week of November 2010 the market specialists did not report about emerging signs that such prospects of the US fishery already started exerting a noticeable influence on the price situation with Russian products.

In the first half of November 2010 prices for headed pollock of the Russian origin mostly ranged at 1320-1380 USD per tonne (CAF China). At the same time prices for large pollock (mostly 30/35+) reached 1400 USD per tonne, however the Chinese processors reluctantly purchased lots of smaller pollock with the dominating size of 20/25+ due to which prices for the such products partly descended below 1300 USD per tonne.

Pollock roe

In September 2010 the general activity of the US export of frozen pollock roe again declined, though theoretically September could become a month of the highest activity of export shipments of products from the summer-autumn season B. At the same time, the volume of the September export again turned out to be much lower than last year which developed into one of the clearest trends in the development of the US export of pollock products.

In September 2010 traders shipped only ca.330 tonnes, ca.10% down on August 2010, with direct shipments to Japan still developing extremely slowly (total shipments amounted to only ca.50 tonnes), and South Korea remained the dominating destination. Shipments to China, where the bulk of ready products for the Japanese market were produced, were not registered again and that could confirm the statement that in the current year 2010 the Japanese users showed extremely low interest in Alaskan summer pollock roe in any processing form. Just like in August 2010, the average export price leveled at 8.00 USD per kilo described as too high for the summer pollock roe (though in September 2009 prices were even higher at 9.00 USD per kilo).

In general, in the first nine months of the current year 2010 the total volume of the US export of frozen pollock roe failed to reach 11,000 tonnes and namely amounted to only ca.10,900 tonnes. As compared to last year, it went down by 29% or nearly 4500 tonnes, while the total volume of pollock roe production in Alaska as a result of two seasons amounted to ca.16,500 tonnes, declining only by 2000 tonnes or ca.10%. Some market specialists think that some of the producers halted sales hoping for better prices from the Japanese side in the low season.

Direct shipments to Japan declined by more than 36% on last year and amounted to ca.5400 tonnes, while the volume of shipments to the South Korea declined by only 16% and amounted to ca.5400 tonnes too. Probably, that was also due to problems with shipments of Alaskan products due to their not very high quality.

In the meantime, price for shipments to Japan and South Korea surprised the traders again. While the September result turned out to be much lower than last year, in the period from January to September 2010 the average export price leveled at 9.50 USD per kilo, ca.5% or 0.50 USD per kilo up on last year, while the price results at auctions in Seattle spoke about a considerable decline of prices, even despite a stronger exchange rate of Yen as compared to 2009. The data for the Japanese import showed that the average import price through the period declined nearly by 32% to only ca.665 Yen per kilo. As for shipments to South Korea, prices also showed a downward trend with the average import price as per late September 2010 failed to reach even 3.00 USD per kilo, 12% down on last year, though the South Korean users always preferred working with US products of the lowest quality probably due to the rise of won exchange rate.

US export of frozen pollock roe to Japan and South Korea in 2009-2010
Japan		South Korea
Metric tons	Yen per kilo	Metric tons	USD per kilo
2009
July	1,286	744	66	3.14
August	202	378	23	3.29
September	400	1,478	119	3.33
Total	16,954	972	944	3.39
GRAND TOTAL	17,926	958	1,913	3.37
2010
July	613	629	16	4.45
August	301	824	59	2.82
September	240	1,058	90	3.31
Total	12,160	664	775	2.97
Note: 1 - average import prices CIF; 2 - according to official customs data.

Unlike prices for the US shipments those for the Russian shipments were at a comparably high level for the current market situation. More specifically, the average CIF price to Japan declined by only 8% to ca. 795 Yen per kilo, and that could be explained mostly by strengthening exchange rate of Yen (at least, in August and September 2010 the exchange rate was 9% higher than last year). The average import price to South Korea rose by more than 9% to ca.7.70 USD per kilo. Only for shipments to China it turned out to be below the last year result, though only by 5%, and settled at the level of 8.00 USD per kilo, while in September 2010 prices for shipments to South Korea were higher than 10.00 USD per kilo, and for shipments to China - higher than 12.00 USD per kilo.

However, according to many market specialists, even Russian producers having more or less success in sales of products from the season of 2010 can in no way be sure that they will succeed in upholding prices in the coming year 2011. First of all, results of sales of ready-to-eat pollock roe on main wholesale markets of Japan do not say that producers and sellers have succeeded in reaching a noticeable positive dynamics by means of strong restraint of prices. Second, quotas 2011 for the Okhotsk fishery have been left at the high last year level of ca.1 million tonnes, which is supposed to provide for high roe yield of more than 30,000 tonnes. Third, for the US Bering Sea fishery the catch quotas 2011 may be considerably increased and thanks to better age structure the pollock roe output in Alaska may show even a stronger rise.

Cod

The draft estimates of allowable catches 2011 of a number of popular species for the US fisheries in the east of the Bering Sea which were made public on the first week of November 2010 provided for setting the cod TAC 2011 at 235,000 tonnes.

Should the draft be approved by the North Pacific Fishery Management Council, the biologically allowable catch 2011 of Bering Sea cod in Alaska would be 35% higher than that of 2010. Thus, the TAC could also exceed the current year TAC by ca.168,800 tonnes or 35% to ca.228,000 tonnes. In case of the draft's approval for the first time since 2005 the US capture quotas would reach the level of 200,000 tonnes and even exceed the quotas in the seasons of 2004-2005 when the TACs correspondingly amounted to 215,000 and 206,000 tonnes.

Most probably, such a considerable rise of capture quotas could lead to weakening situation on the markets of Alaskan products and a price fall, though as per mid-November 2010 especially noticeable influence of such prospects of the coming year 2011 onto the price situation of the continuing B season was not observed. The Japanese importers attributed that to comparably slow development of longline fishery in the current autumn.

After a switch from the Olympic to per-ship system of fishery management and a decline of the number of longliners by one fourth (namely to 26 ships) the weekly catches of Bering Sea cod decreased to only 2000-2500 tonnes, while last year they were fairly stable at 3000-3500 tonnes. As a result, by early November 2010 freezing longliners remaining the main producers of frozen Bering Sea cod of high quality harvested only ca.25,000 tonnes out of the season B quota of more than 35,000 tonnes.

The Japanese side started purchasing products from the season B at prices of ca.3.65 USD per kilo (CAF, Japan, for headed and gutted product of Grade 1), but in the course of the season the Japanese importers had to agree on a price rise to ca.3.75-3.80 USD per kilo. On the second week of November 2010 some buyers agreed to purchase cod at auctions at prices of 4.00 USD per kilo.

Hake

As per early November 2010 the total harvest of hake in the USA amounted to ca.152,000 tonnes, the quotas were covered at 78.5% and the quota remainder declined to less than 42,000 tonnes. The result of last year was already exceeded by more than 30,000 tonnes.

In the meantime, such a strong rise of supply was not accompanied by growth of export shipments from the USA. More specifically, in September 2010 the US traders exported ca.6000 tonnes of frozen hake (fillets inclusive), 23% up on the corresponding result of last year, however the total export volume in the first three quarters of the current year was limited to less than 28,500 tonnes, 9% or ca.3000 tonnes down on last year.

As for main directions, downward trends in shipments were observed for Russia, the Ukraine and China against a background of rising shipments to Germany and especially to Japan. By the end of September 2010 shipments to Japan reached 3700 tonnes (up from less than 100 tonnes last year) with prices being fairly low at less than 1.40 USD per kilo FAS, while those for shipments to Russia and even to the Ukraine amounted to ca.1.80 USD per kilo. Export to Germany grew by nearly 5% to ca.3800 tonnes, but in September 2010 only 800 tonnes were shipped to that direction, 1000 tonnes down on last year (at the same time the average export price in September 2010 was at least 1.00 per kilo higher than last year and amounted to 3.80 USD per kilo (thus traders shipped mostly high quality hake fillets).

Export of frozen hake to China in January-September 2010 declined by more than 20% to only ca.2900 tonnes, however in September 2010 the activity of shipments was the highest. In September 2010 traders shipped ca.2150 tonnes, practically 2000 tonnes up on last year, but while in September 2009 the average export price amounted to nearly 3.25 USD per kilo of mostly hake fillets for fast food US chains, in the current September it was limited to only 2.00 USD per kilo of mostly headed hake.

To Russia and the Ukraine in September 2010 the total shipments amounted to 1650 tonnes of frozen hake, approximately on a par with the last year result, however in general through the first nine months of the year the total export to those directions amounted to ca.12,900 tonnes, 21% down on shipments in January-September 2009. However, while shipments to Russia declined by only 3% to 6300 tonnes, in September 2010 they turned out to be nearly 30% up on the respective result of last year and amounted to more than 720 tonnes, shipments to the Ukraine declined by 34% to less than 6600 tonnes and in September 2010 they amounted to 930 tonnes, 12% down on last year (export prices for the above mentioned two directions rose by ca.0.10 USD per kilo to 1.80 USD and 1.75 USD per kilo correspondingly).

Saury

Official figures on new Japanese catches of saury showed that prospects for export shipments of frozen saury from Japan in the current season would hardly be as favorable as in the season of 2009.

In September 2010 the total landings of saury at main Japanese ports amounted to only ca.39,000 tonnes, practically 40% down on September 2009. At the same time, landing prices jumped more than twice, at least judging that the average landing price amounted to ca.200 Yen per kilo (or ca.2.35 USD per kilo based on the average exchange rate of September), nearly 145% up on last year.

In October 2010 the fishery situation looked not that gloomy for the industry, though landings remained slower than last year. The total landings of saury from dedicated operations at all ports amounted to ca.78,000 tonnes, nearly 10% down on last year.

In October 2010 the average landing prices dramatically declined against the background of rising activity of landings, but it still remained much higher than year. The average price leveled at 100 Yen per kilo (or ca.1.25 USD per kilo), 90% up on last year.

The average price for the season exceeded 150 Yen per kilo, 85% or ca.70 Yen per kilo (ca.0.85 USD) up on last season. The total volume of seasonal landings as per late October 2010 amounted to only ca.133,500 tonnes, 35% or nearly 71,500 tonnes.

According to the official Japanese figures, in September 2010 the nation's shipments to all directions amounted to only 30 tonnes of frozen saury, while last year active export shipments started already from September 2010 and the volume of September export immediately reached 3300 tonnes. Direct shipments to Russia amounted to ca.10 tonnes with the average export price FOB amounting to only 70 Yen per kilo (ca.0.83 USD). Such prices were also observed for shipments to South Korea, while the average indications for all the directions leveled at 150 Yen per kilo (more than 1.75 USD per kilo). Probably the two countries kept purchasing products from the last season.

Japanese export of frozen saury in 2009-2010
	Russia		South Korea		China		TOTAL
	Metric tons	Yen per kilo	Metric tons	Yen per kilo	Metric tons	Yen per kilo	Metric tons	Yen per kilo
2009
July	149	83	0	-	362	83	1,338	84
August	405	81	146	41	286	87	1,402	78
September	0	-	1,598	54	263	77	3,303	67
Total	4,303	67	7,696	52	6,514	72	37,469	62
TOTAL	26,396	71	15,962	56	8,559	75	75,436	66
2010
July	0	-	0	-	123	114	359	108
August	0	-	0	-	72	159	104	159
September	9	70	12	71	2	351	31	151
Total	40,201	78	1,805	70	2,319	110	46,719	81
Note: 1 - average export prices FOB; 2 - total figures cover shipments to Thailand, the USA, Egypt and other directions; 3 - according to the Ministry of Finance of Japan.

However, last year even with such export activity in September 2010 direct shipments to Russia did not make even one tonne (active direct shipments to Russia began only in November when traders exported more than 4500 tonnes, and in the course of the season there were two peaks of active shipments, namely in December with the result of ca.17,500 tonnes and in March with the result of more than 14,500 tonnes).

In general, in the first three quarters of the year Japan exported to Russia more than 40,000 tonnes of frozen saury, ca.9.5 times more than last year. The total exports of products from the season of 2009 to Russia was close to 62,500 tonnes (direct shipments), while some market specialists kept thinking than a considerable share of 10,000 tonnes shipped to South Korea was re-exported to the Russian market. Most probably, in the current season of 2010 there will be a rollback to low results of seasons of 2006-2008 when the direct exports to Russia failed to reach even 5000 tonnes.