Overview of key markets for fish products from Russian and American Pacific fisheries as per second week of March 2011

In the first half of March 2011 the general situation on the Okhotsk grounds of Russian pollock encouraged the fleets to maintain brisk production of frozen pollock roe, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

On the first week of the month the total Russian harvest in three main subareas of West Kamchatka exceeded 72,500 tonnes of roe pollock with the weekly roe yield reaching 3000 tonnes, thanks to which the roe production for the first time in the current A season amounted to 4.20%. Market specialists already concluded that combination of the average daily catch of 10,000 tonnes and the rise of the roe yield to more than 4% could root from comparably early maturation of roe and its partial transfer to overmature stage.

On the second week of March 2011 the Russian pollock fishery in the Sea of Okhotsk grew brisker and catches even more increased and practically reached the level of 80,000 tonnes (namely amounted to 79,85 tonnes). At the same time, the weekly roe yield was reported at 3400 tonnes and the roe content rose further to 4.30%. The Japanese importers paid much attention to a shift of main fishery activity from the Kamchatka Kurile subarea to the West Kamchatka subarea, the development actually not observed in 2010. That could result to a decrease of the roe content in overmature sacks to the benefit of the share of mature and higher quality roe, mostly thanks to the fact that pollock was older than last year and the bycatch of juvenile pollock was comparably low.

It is necessary to remind that maximum roe yield in Russia is restricted by Fishing Rules.  According to confidential reports from industry sources, real roe yield is exceptionally good, sometimes more than 10%, and to not to be claimed poachers fishermen have to reduce some roes into fishmeal.

At Pusan auctions which were conducted on 9-10 March 2011 a part of February products was sold at prices above 700 Yen per kilo (more than 8.50 USD per kilo) and even at about 800 Yen per kilo (slightly below 10.00 USD per kilo). The above prices were actually higher than expected before the start of the current season when the estimates were based mostly on contraposition of Russian and US products. The quality of pollock roe this year was reported as not inferior and even partly higher than the last year roe quality which could explain unexpectedly strong prices.  Another factor is strong exchange rate of Yen. However, the earthquake in the waters of Tohoku upset all plans on auction sales, therefore the further developments of the situation with the Japanese purchases turned extremely difficult for forecasting.

On the US Bering Sea grounds of roe pollock the situation in the beginning of March 2011 was also very favourable and the output of main products was not brisk, but still both for the catch rates and roe yield the results of Alaskan catches have been so far noticeably worse than those of Russian operations. The total volume of pollock catches in Alaska in the first week of March went slightly down as compared to the closing week of February 2011, but on the main Bering Sea grounds it grew nearly by 10% to ca.53,500 tonnes, an intermediary record for the current season A.

By March, 12 American fisherman already produced more PBO fillet and surimi than in A seasons of 2010 and 2009.  Two thirds of quota already taken, and now, particularly after the earthquake and tsunami American producers, there is a question what will be produced further on.  There is a good chance that surimi demand in Japan will become soft.  However, surplus fillet production will definitely decrease pricing.

The roe yield on the Bering Sea grounds continued rising, but on the first week of March 2011 it still failed to reach the level of 4% and amounted to ca.3.85%. At the same time, the Japanese importers thought that if factory trawlers had also been working on young five-year-old pollock (now dominating in the commercial stock) the total roe yield would have been much lower as it was mostly provided by concentrated operations of the factory trawlers on large-size pollock of older classes for the sake of raising efficiency of fillet production.

As per 12 March 2011 the Bering pollock quotas have been covered already nearly at 67% and their remainder has come down to as low as 200,000 tonnes to be covered by the fleets within less than four weeks subject to their active operations. The seasonal roe output in Alaska as per the above date has amounted to ca. 10,807 tonnes (on the Russian grounds only in the first two weeks of March the fleets produced ca.6500 tonnes of pollock roe). Under some estimates if frozen pollock roe production from raw material in the Gulf of Alaska grew in line with a 10% increase of the area's quota to less than 1200 tonnes and the roe yield in the Bering Sea in the closing part of the season reached 4%, by the end of the A season the total roe output could approximate the level of 16,000 tonnes. But if the factory trawlers had to switch to the five-year-old pollock and the roe yield failed to stabilize at 4%, the seasonal production could fail to reach 15,000 tonnes.

Thus, if the above estimates turn more or less true, the US production of pollock roe will increase by only 2500-3500 tonnes or less than 25% on last year.

The first round of auctions in Seattle which was scheduled to take off on 15 March 2011 was cancelled under the initiative of the US side which was deeply impressed by the terrible consequences of the earthquake in Japan. The US producers delayed the auctions as the earthquake and the tsunami covered the Japanese area of Sunriku, a place where fish processing facilities area concentrated. In the meantime, despite the natural disasters some of the Japanese buyers were allegedly ready to fly to the USA to take part in the auctions.

The auctions' delay evidently turned the situation with the time periods of US auction sales indefinite. By the time of preparing of this article the producers were going to conduct one round of sales after the end of the A season, either 10 days from April, 12 or a week starting April, 18. The position of Russian producers who have already suspended their sales for the period of the first round of auctions in Seattle now seems fairly difficult. The Japanese sources said that one of leading Russian producers Akros company has already sent invitations to the Japanese side to its auctions in Pusan to be hold on the first week of April 2011.

Saury

Japanese export of frozen saury in January 2011 grew strongly down which corresponded expectations of many market specialists paying attention to the interest of the Japanese side to Taiwanese shipments of frozen saury to China and especially to Russia. Last year dramatic slowdown of seasonal shipments of frozen saury of the Japanese origin for export was also observed, but the export volumes were at a higher level than in the current season. The Japanese saury catch 2010 from dedicated operations decreased by 37% on 2009 and for the first time after 1999 failed to reach even 200,000 tonnes (namely amounted to ca.193,500 tonnes).

The seasonal landings of saury in Japan went down practically by 115,000 tonnes, with the main decline of ca.85,000 tonnes or 43% to be observed in ports in the northeast of Honshu where the season was developing mostly from mid-autumn when the fresh fish market was already filled with Hokkaido products (meaning that the raw material for frozen fish production was mostly short in supply). The situation grew worse by a dramatic rise of landing prices as the average result for the season turned out to be practically twice up on 2009 (the rise amounted to nearly 93%) and reached more than 130 Yen per kilo while even in the end of the season 2010 the prices stayed close to 100 Yen per kilo and in the season 2009 they were well below the level of 50 Yen per kilo. Taking into account strengthening of Yen exchange rate in the closing third of the year 2010 by 5-10% (maximum rise for the period was observed in November, when it slightly exceeded 10% and the minimum rise of 5.5% was observed in December) the position of the Japanese producers of frozen saury meant for export and its exporters was simply poor.

Peak of seasonal shipments was reported in December 2010 when the shipments amounted to 9200 tonnes, nearly 2.5 times up on November 2010, but even then the export volume was very strongly, namely 85%, behind that result of 2009. In January 2011 with a very dramatic decline of the general activity of export its volume went 13 times down to only 700 tonnes, more than 90% down on January 2011. The volume of shipments to Russia also peaking in December 2010 (ca.7500 tonnes) sank nearly 40 times to only ca.200 tonnes, while in January 2010 even also with a strong fall of export volumes to Russia the shipments totaled nearly 7000 tonnes. A combination of such strongly negative factors as a considerable decrease of the seasonal harvest and a dramatic rise of landing prices made the conditions for export extremely unfavourable and the Japanese exporters actually could not but have a success in such a situation.

The average export price for shipments to Russia in November 2010 when more or less active shipments to Russia took off, amounted to 100 Yen per kilo (FOB) or ca.1.23 USD per kilo. In December 2010 it went down to 90 Yen per kilo or ca.1.08 USD per kilo (based on the average exchange rate of 83.5 Yen per USD) and in January 2011 it jumped by more than 40% to nearly 130 Yen per kilo or ca.1.55 USD per kilo (for shipments to the South Korea it only slightly exceeded 100 Yen per kilo or ca.1.22 USD per kilo).

The total volume of seasonal export of frozen saury from Japan declined by ca.36,000 tonnes or nearly 70% to only 14,500 tonnes. The volume of direct shipments to Russia went down by 63% or 18,500 tonnes to only 11,000 tonnes and export to South Korea got practically ceased as the volume of shipments from September 2010 was limited to less than 800 tonnes, while last year the country importers more than 11,000 tonnes as per the end of January 2011.

At the same time the remainder of frozen saury inventories in main coldstores of Japan by the beginning of February 2011 went down only by 11% on last year and amounted to slightly below 36,000 tonnes, less than 4000 tonnes down through the month. By the start of the month more than 30,000 tonnes remained at coldstores. If in March 2011 at least some holders of inventories tried to get rid of their stocks, the Japanese export of frozen saury would probably grow booming more over fish processors based in the northeast of Honshu would hardly be able vigorously work with the raw material.  At the same time, opposite development is also possible as the facilities located in the suffered area containd substantial volume of saury.  Also, now it is not clear how the earthquake influences on possible catch of saury and the very possibility for the catchers to go to the sea in 2011 season.  Maybe, it would be wiser for Japan to store the rest of the stock for domestic consumption.

Japan

The situation in the northeast part of Honsu remains not yet clear after the disaster, which real consequences will take share later. Actually, seven out of 12 main fish ports located in the north of the Pacific coast of Honsu suffered greatly as they were in close vicinity to the earthquake's centre.

Sunriku is a very important area for the Japanese seafood industry. The main species harvested here are: saury, mackerel and squid. In 2010 in 6 ports from Miyako to Ishinomaki about 90,000 tonnes of saury were landed out of the total volume of 195,000 tonnes shipped to the Japanese ports while in 2009 the fishermen landed about 125,000 tonnes of saury. The share of this area in the total harvest amounted to 45%.

In 2010 76,000 tonnes of Pacific squid were landed in Sunriku ports including 62,000 tonnes of chilled products and 14,500 tonnes of frozen squid. The share of this area in the total dedicated squid harvest amounted to 40%, only 5% down on the share of Hokkaido ports.

This area of Japan is important also for chum salmon market. In 2010 total harvests in the area amounted to 22,500 tonnes of autumn chum salmon accounting for 15% of the total Japanese harvest. An average landing price in the area almost doubled to Y420.00 per kilo (more than USD 5.00 per kilo) in comparison with 2009 figures while in Hokkaido the average landing prices rose by 5% to only Y340.00 per kilo (USD4.15 per kilo).

The harvest volume of all three species fell in 2009 in Sunriku area, saury volumes dropping by 45%, squid by 20% and chum salmon by 35%.

On the other hand, in December 2010 total landings of squid in Sanriku area jumped to 16,000 tonnes (fresh and frozen) and landings of mackerel in Ishinomaki in the last quarter 2010 increased by 15% to 23,000 tonnes.

In 2010 Japan imported at least 50% of frozen mackerel from Norway or almost 74,000 tonnes of fish (excluding fillets) as well as plaices and halibuts and the bulk of these products are processed in this part of Japan.