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

In the middle of March 2010 the main focus both of markets and producers was still stuck to progressing pollock fishery. However, the equator of the winter-spring season was evidently over and its closure was getting soon. Against that background the market interest in salmon was growing as the salmon fishery in the North Pacific would open already in the end of May 2010 (in some two months from mid-March 2010), according to the overview prepared by analysts of http://www.megafishnet.com/ (https://www.fishnet.ru/) based on Japanese and Russian sources.

In connection with the above developments, the Japanese statistics on salmon roe imports noteworthy highlighted comparably good sales of products from the salmon fishery in the season 2010. The saury season was expected to start much later, but progressing of the Japanese export of frozen products attracted no less attention of interested sides, especially with regard to the current need of planning sales and purchases of saury from the new harvest.

Pollock

In the first week of March 2010 the US Bering pollock fishery showed no especially noticeable changes in the fishery situation in general (at least, as reported by the Japanese and other market specialists). However, slowdown of the catch rates could not but be noticed as many market players pinned hopes for a dramatic increase of the catch rates in Alaska in March 2010 as well as for a peak of the A season in the area.

The pollock harvest in the Bering Sea through the week under analysis went down nearly by 24% and failed to reach even 27,500 tonnes. Even catches in the Alaska Bay where in the current year the fishery was progressing very quickly, fell by more than 30% to 3500 tonnes. The total harvest amounted to less than 31,000 tonnes, more than 10,000 tonnes or practically one fourth down on the closing week of February 2010. The Japanese market specialists attributed the slowdown of the catch rates to the fact that in the beginning of March 2010 motherships started to transship the seasonal products to transport vessels. At the same time, the harvest out of the quotas linked to onshore processors also considerably decreased (namely twice down on late February 2010), and that could be interpreted as certain changes in the fishery situation were still observed and the sector failed to get quickly adapted to them.

Keen interest was caused by the reports about retaining dynamics of strong production of frozen pollock roe in Alaska in the first week of March 2010 as those reports highlighted all probability of a dramatic rise of roe yield and consequently of faster roe maturation. According to some estimates, that would actually question the prospects of quality improvement for Alaskan products from March harvest which would be evidently offered in the second round of auctions in Seattle.

The weekly roe production amounted to ca.1650 tonnes, only 9% down on the closing week of February 2010 when the pollock harvest was one third larger than in the first week of March 2010. Thus, according to official figures, the roe content through the week rose nearly by 1.5% to 5.65% which could be regarded an exclusively high result for early March. Taking into account the recent reports, either the official statistics of the previous weeks did not reflect actual production indices, or practically on all the grounds pollock roe was getting overmature or the fishery participants finally found abundant schools of spawning pollock. The answer to those questions may be given only after publication of the catch rates in the second and third weeks of March 2010, so far the market specialists could only guess what really happened because even those Japanese sources which had online access to catch information did not report anything about any dramatic changes.

The total volume of the seasonal pollock harvest in the USA in the eastern part of the Bering Sea by the start of the second week of March 2010 amounted to only ca.154,000 tonnes, 23% or more than 46,000 tonnes down on the weak result of the A season 2009. The total Alaska harvest went down by ca.18.5% (38,500 tonnes) on last year to 171,000 tonnes. Production of frozen pollock roe decreased more greatly, namely by 22% to a little more than 6700 tonnes. However, the latter figure included maximum ca.5500 tonnes to be offered in the course of the first round of auctions taking off in Seattle on 17 March 2010.

Presumably, already on 18 March 2010 the whole volume of land-processed products prepared for the first round of auctions will be sold out (according to the auction plans made public by leading producers). The market specialists therefore fear that the price level might turn out to be much lower than in the first round of early-March seasonal sales of Russian products at auctions in Pusan. The Russian producers expectedly paused their sales while the auctions in Seattle were running. They evidently hoped that the average level of quality of Alaskan products would be much lower than the quality of Russian products and that would open way to increase prices at auctions in Pusan. However, skeptics in no way believed in soundness of such hopes, they thought that a considerable rise of the Russian supply would be inevitable thus turning into a determining factor. They also said the price level might descend much beyond 7.00 USD per kilo even for those product lots containing a large share of good quality pollock roe. It could be easily conceivable which financial results would come out for those Russian producers who had to pay export duties at higher rates as the customs authorities still had a quite different point of view on the prospects for the pollock roe prices in the current season.

As for other types of commodity products from the US fishery, the dynamics of H&G pollock production retained against a gradual improvement of surimi and fishmeal output and problems with fillet production in the first week of March 2010. More specifically, H&G pollock production rates remained quicker than last year and the seasonal output by the start of the second week of March approximated 12,000 tonnes, more than 85% up on the respective result of the A season 2009. The seasonal output of fishmeal declined by only 7% to ca.6000 tonnes, and the seasonal production of surimi declined by less than 10% to nearly 19,000 tonnes.

At the same time, the seasonal production of pollock mince declined by more than 16% and failed to reach 4500 tonnes by the start of the second week of March 2010, while the seasonal output of all fillet products (along with surimi it plays the key role for the US producers, unlike their Russian colleagues) descended by more than 19% to only ca.22,000 tonnes. At the same time, the output of skinned and boneless fillets (main US export article) fell nearly by 24% or more than 3500 tonnes to only 12,000 tonnes.

On the Russian pollock grounds the main fishing efforts in the first half of March 2010 kept concentrating in the northeast part of the Sea of Okhotsk at the western coast of Kamchatka. The total number of vessels on the Okhotsk grounds in the middle of the month jumped to 160 which was described as the largest possible level. The highest catch rates were still recorded in the Kamchatka Kurile subarea, but sometimes fairly good rates were reported in the West Kamchatka subarea as well.

Official representatives of the bodies controlling progressing of the Okhotsk fishery showed that in the middle of March 2010 the harvest only exceeded 550,000 tonnes, but judging by the scientific data the seasonal harvest already noticeably exceeded 600,000 tonnes and the total volume of Russia's pollock harvest approximated 650,000 tonnes. According to the Japanese specialists, by the end of February-early March 2010 the seasonal production of frozen pollock roe on the Russian grounds in the Sea of Okhotsk reached 16,000-17,000 tonnes thus meaning that by the start of the second round of auctions in Pusan the Russian producers would be able to prepare up to 15,000 tonnes of seasonal products. The actual product supply would hardly be as much as mentioned above at those auctions which would be probably conducted in the closing week of March 2010. However, very brisk catch rates on the Russian grounds and big output of pollock roe exerted a respective influence on position of the buyers who kept counting on a strong Russian supply meaning practically unlimited opportunities for purchases.

As another confirmation of such estimates, the Russian fishermen discontinued claiming that in the winter-spring season leading pollock quota holders would cover no more than 70% of the annual quotas. Foreign specialists did not rule out the possibility of the seasonal harvest in the Sea of Okhotsk to reach 1 million tonnes which also influenced the position of potential buyers of the Russian products.

Saury

Development of the Japanese export of frozen saury in the beginning of the current year confirmed very strong interest of the Russian users in the Japanese raw material even under conditions of stably strong exchange rate of Yen to USD. Data for direct shipments to Russia in January 2010 was actually in keeping with the reports of the market participants on activity of the Russian purchases of the Japanese raw material from the season 2009. In connection with the above, the export data for February and March 2010 was strongly awaited as some of the Japanese exporters spoke about a practically complete suspension of seasonal product sales already in the very beginning of the year. In the meantime, the reports said that shipments in February 2010 could amount to 5000 tonnes and even in March 2010 the export sales displayed definite activity, though in the end of 2009 the turn-of-the-year inventories of frozen saury in Japan were estimated as quite low.

In January 2010 the volume of the Japanese export of frozen saury to Russia decreased by approximately 60% on December 2009. At the same time, it appeared to be very close to a fairly high level of 7000 tonnes, nearly 45% up on November 2009 when the seasonal shipments actually took off.

Apart from a big rise, the main difference in progressing of the Russian import of products from the season 2009 and that of season 2008 lied also in the fact that export shipments started already before the closure of the fishing season, while in the previous season of 2008 export took off (at least, direct export to Russia) only in April when the Russian canneries ran out of coldstore inventories of home-made raw material. The total export of products from the 2008 season to Russia was limited to only 4200 tonnes, while in the current season the respective result only via direct shipments and only in the first three months of the seasonal export amounted to ca.30,000 tonnes.

According to some estimates, the total export of products from the season 2009 in the following five or six months might reach the exclusively high level of 50,000 tonnes, as the active interest of the Russian side in the Japanese raw material did not cause serious doubts and new players were reportedly trying to purchase it. Mostly thanks to the activity of the Russian side, the seasonal export of frozen saury from Japan jumped nearly by 50% by the end of January 2010 as compared to the previous season and reached the level of 50,000 tonnes. At the same time, the dedicated trap harvest declined by 8% and failed to reach 300,000 tonnes actually amounting to ca.293,000 tonnes.

The average export price (FOB) for direct shipments to Russia ranged from 68 to 74 Yen per kilo, and in the course of the season it gradually increased while in the previous season it was mostly below 65 Yen per kilo. Presumably, some of the products shipped to South Korea were actually meant for the Russian market. Prices for those shipments were generally lower than those for direct shipments to Russia (the price range amounted to 54-70 Yen per kilo), and the export volume to South Korea more than doubled to ca.11,000 tonnes by the end of January 2010.

Some market specialists thought that in the coming season the Japanese producers and exporters of frozen saury could also count on good sales of products for the Russian market. Their hopes could be indirectly confirmed by the information that the Russian fishermen had applied for the whole volume of quotas (ca.12,000 tonnes) which could be given to the Russian side for fishing operations in the Japanese zone in autumn 2010. Besides, a forecasted decrease of the Russian pink salmon harvest in the season 2010 by ca.200,000 tonnes also created favourable conditions for maintaining strong interest in the Japanese raw material from the Russian canneries.

Salmon roe

The Japanese import of frozen salmon roe (mostly pink salmon) of the Russian origin also left a fairly positive impression.

In the season of 2009 the spawning runs of pink salmon in the Russian Far East were exclusively active and the total harvest of salmon on the Russian grounds exceeded 500,000 tonnes and amounted to ca.520,000-540,000 tonnes (according to different sources) even despite marine driftnet fishery for the Russian participants was not allowed in its optimum time period. Such record strong production volume enabled the Russian producers to dramatically increase the output of salmon roe (even without taking into account non-registered producers), and a certain cooling of the end demand for sieved roe against the background of the economic problems in the world made them weaken their offer prices for foreign, mostly Japanese, buyers of frozen roe.

Serious changes in the activity of the Japanese import of the Russian raw showed themselves already in September 2009, or actually in the very beginning of the sales season when the imports amounted to ca.250 tonnes, nearly 10 times up on September 2008. The average CIF import price as an objective indicator of the general price situation with purchases immediately highlighted the fact of declining prices for the Russian raw for the Japanese buyers to fairly appropriate levels and even to the level attractive for the Japanese buyers. In the first two months of seasonal shipments (September and October) the average import price amounted to ca.100 Yen per kilo (equal to 11.00 USD per kilo) and in the following two months it rose by ca.15% to 1150 Yen per kilo (or ca.13 USD per kilo). However, the price rise could not impede a brisk increase of shipments as even despite a seasonal peak of prices they remained approximately 50-60% down on prices for shipments from the season 2008 when the Russian producers who knew they would have no serious problems with sales on the domestic market strictly commanded prices for the Japanese buyers.

In January 2010 the average import price even declined by 8% and returned to the level of 1000 Yen per kilo (namely to 1060 Yen or ca.11.50 USD per kilo), and the volume of shipments rose nearly 2.5-fold on December 2009 and appeared to be close to 500 tonnes (amounting to ca.460 tonnes namely). The import activity in the beginning of the year came out as a surprise for the market participants as in December 2009 there was a dramatic decrease of shipments which gave rise to talks that the main phase of the seasonal import was over already in November 2009 when the customs cleared more than 1000 tonnes of products.

However, anyway by the end of December 2009 the seasonal import of frozen salmon roe from Russia to Japan approximated 3000 tonnes and amounted to ca.2900 tonnes, and taking into account the January import it got closer to 3500 tonnes and amounted to ca.3400 tonnes, nearly 210% up on the import volume of products from the season 2008 (September 2008 - January 2009). The above development was regarded another confirmation of quickly recovering interest in the Russian raw material with the Japanese processors of ready-to-eat salmon caviar (mostly sack roe in soybean sauce) after a dramatic price fall. As compared to the previous two seasons (2006-2007), the import rise was also very strong at about 200% thus resembling a brisk dynamics of Russian shipments in early 2000s.

Interest in the Russian raw material from the season 2009 did not go down either by comparably high activity of shipments of US salmon roe (the total volume of the Japanese import of salted and frozen products in 2009 reached the level of 6000 tonnes, only 6% down on 2008), or by unexpectedly rich salmon catches of the Japanese fishermen. More specifically, as per late December 2009 the harvest of autumn chum in Hokkaido reached 158,000 tonnes, more than 30% up on 2008 and as per 31 January 2010 the total Japanese catch of autumn chum salmon amounted to 198,500 tonnes, 23% up on 2008, which created more or less favourable conditions for the Japanese salmon roe producers.

The market specialists said that in a current situation on the Japanese market, which was mostly defined by the deflation trends, the price factor played a key role letting traders maintain and even raise activity of sales in case prices were taken by the end consumers as low. That left good chances for sales of those products for which the producers could afford to offer flexible prices with prices for the raw material therefore growing especially important, and that evidently reflected in the activity of the Japanese import of frozen salmon roe of the Russian origin.

A new fishing season in Russia will be opened in some three months and good results of frozen roe sales in the previous season will give the Russian producers a reliable basis for planning sales in the current season 2010.