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

On the second week of May 2011 Russian producers resumed sales of frozen pollock roe at auctions in Pusan, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources as per 18 May 2011.

As one the most important results of the May auctions prices remained high and even slightly rose taking into account the fact that traders already offered mostly products from the closing stage of the Okhotsk fishing season. The quality of such products is always characterized as not very high due to quite natural reasons (especially due to quickly approximating period of the stock's spawning).

According to the Japanese dedicated sources, the first May auctions were conducted on 11 and 12 May 2011 soon after the end of the Golden Week in Japan. On the first auction day ten companies offered ca.1700 tonnes of roe and on 12 May 2010 the supply grew to more than 2000 tonnes which were offered already by 14 companies. Practically all the supply was sold out.

As for the price results of the first May auctions, products of more or less good quality compliant with strict requirements of the Japanese users were sold at about 11.00 USD per kilo, and some of leading and highly reputed producers managed to sell at 11.50 USD per kilo (for instance, Kamchatka-based fishing giant Akros enjoying good reputation on the Japanese market thanks to strong stability of quality indices).

Besides, prices for products of above average quality generally remained at the high level achieved at last April auctions. However, the market specialists were more surprised by the fact that lots of products of average quality were sold at strong prices, because the quality of such products already rooted problems typical for the pollock roe produced in the closing decade of March and first ten days of April. The Japanese specialists reported that the move of the Russian producers to the grounds in the North Okhotsk subarea close to the central part of the sea and to the West Kamchatka subarea was accompanied with a rise of roe content in large and small sacks and a decline of roe content in medium-size sacks with optimal maturity rate. However, prices for lots of such products did not go below 9.00 USD per kilo and partly settled above 10.00 USD per kilo which was characterized as a price rise against a quality decline. The Japanese users actually had to give up hopes for a decrease of prices for the Russian raw pollock roe at auctions in May 2011.

The main reason behind high prices for Russian products in May 2011 (after the end of auctions of US products in Seattle) was that the share of raw pollock roe of high grades in the total supply of US products remained limited while the volume of Russian Okhotsk products remained unsold after very active April sales went down to the lowest level. Besides, some of the largest producers continued trading by themselves (not at auctions) and their buyers were a priori known. The situation at May auctions was also heated by participation of those buyers who in the recent years were not noticed as interested in the Russian raw material.

Some market specialists think that in such conditions the price level in the course of closing auctions of Okhotsk pollock roe could if not rise but stay high, as in the middle of May 2011 the volume of unsold products was estimated at only 1700 tonnes. The estimation was based on the fact that seasonal production of frozen pollock roe in three main subareas of the Sea of Okhotsk (for pollock fishery) amounted to ca.29,000 tonnes (with the roe yield of 3.6%) and by the middle of May 2011 auctions covered ca.24,300 tonnes of Russian products and another 3000 tonnes were sold other than at auctions. Presumably, in the closing two weeks of May 2011 auctions will also cover products from East Sakhalin, though under some estimates their supply may be limited to less than 1500 tonnes.

As for the US production of frozen pollock roe in the A season of 2011, in May 2011 no changes in official figures either on its production volumes or on production of other commodities were observed. Thus, on main Bering Sea grounds the pollock roe output was registered at 14,200 tonnes (roe yield of 2.9%) and roe production from the raw pollock in the Gulf of Alaska amounted to less than 1,250 tonnes (the roe yield was limited to only 2.75%). The total volume of frozen pollock roe produced in Alaska was obviously limited to less than 15,500 tonnes, therefore, despite more than 1.5 fold increase of quotas the US production of frozen pollock roe in the current year 2011 (for A season only) rose less than by 10% or 1,350 tonnes.

At the same time, import shipments of Russian products to Japan, China and South Korea from March 2010 to February 2011 showed that the actual supply of Russian products from the season of 2010 could be much bigger than 31,000 tonnes (probably amounted to more than 33,500 tonnes). Thus, in 2011 the supply volume could decline despite earlier forecasts of inevitable rise of total Russian and US pollock roe shipments due to a dramatic rise of capture quotas in USA and stable abundance of pollock stocks in Russia. Some market specialists think that the decline of available supply of frozen raw material could be the main reason behind the rise of prices at auctions both in Seattle and in Pusan.

The volume of the US export of frozen pollock roe in March 2011 rose nearly by 55% on the same month of 2010, but it was still limited to less than 6800 tonnes. The total volume of shipments through the first quarter of 2011 amounted to only ca.8500 tonnes, less than 3000 tonnes up on last year. At the same time, shipments to South Korea, which was used by US pollock roe producers mostly as a mindbase, grew by only 600 tonnes or 19% to ca.3900 tonnes, while the volume of direct shipments to Japan reached the level of 4500 tonnes, nearly 2300 tonnes or two times up on last year. However, the price trends were quite the opposite: while the average price for exports to South Korea went up by as much as 24% to 13.25 USD per kilo, the prices for direct shipments to Japan declined by 14% to less than 7.15 USD per kilo. Due to the above developments, the average price for US shipments to all the directions in the first quarter of 2011 rose by less than 2.5% on last year to 9.95 USD per kilo. In March 2011, when main shipments of products from season A already took off, it reached 10.10 USD per kilo, still 1.5% down on last year.

Pollock fillets

The market players showed a serious interest in the official figures for the US exports from season A in March 2011, because that was the month when really active seasonal shipments took off with a big rise on last year. However, the decline of average prices turned out to be not very great and the average export price remained higher than 3.00 USD per kilo, and as for shipments to main European directions it leveled at about 3.30 USD per kilo. At the same time, the Japanese importers and wholesalers were concerned by a potential slowdown of surimi production rates in season B (beginning in less than one month) as the average prices of exported surimi were below those of fillets. The latter two products are competitors in terms of raw material and exactly in season B their competition is the most prominent as the need in roe production practically ceases influencing on the general production pattern.

The price level for shipments of Alaskan products to the countries of Asian-Pacific region (mostly Japan, China and South Korea) remained less high and was generally limited to less than 2.50 USD per kilo, but the situation with sales to the Asian markets so far does not play the leading role in the general situation with foreign sales as main volumes of Alaskan pollock fillets even with a 45% rise of exports to China and a 200% rise of exports to South Korea were still shipped to West Europe. Rise of exports to European markets in March 2011 was not very as big as the rise for all the directions (+25%) and was limited to less than 20%, though taking into account those shipments of more than 13,500 tonnes it was still described as very serious. At the same time, average prices for exports to Europe turned out to be only 8% down on last year and amounted to ca.3.25 USD per kilo. As for shipments to Germany which rose by 18% to 7400 tonnes, the prices failed to descend below 3.30 USD per kilo, still 9% down on last year. Shipments to Holland, mostly used as a mindbase, remained practically on the last year level and their volume was again limited to less than 4600 tonnes. In the meantime, the average export price declined only by 5% and remained close to 3.30 USD per kilo. Shipments to the UK and Belgium were carried out at higher prices of 3.80-4.20 USD per kilo with the volumes being not very big at about 100 tonnes.

The total volume of US exports of frozen pollock fillets in March 2011 was 25% higher than last year and reached 17,700 tonnes, while the average export price decreased by 8% to 3.05 USD per kilo. At the same time, the export volume of pollock surimi grew only by 10% to 17,500 tonnes and the average export price declined by 10% to only 2.45 USD per kilo. The general price indications for surimi shipments could be influenced by the fact that formation of basic prices for the Japanese shipments in March 2011 was not yet finished and shipments could be progressing at the so called preliminary prices. Though if we ignore the latter developments and take into account that shipments of both pollock surimi and fillets to Europe were carried out at agreed prices, the price situation on the surimi market looks for the US producers much less attractive than the price situation on the market of pollock fillets.

In March 2011 surimi shipments to EU countries remained nearly unchanged as compared to last year and amounted to 2900 tonnes, but the average export price sank by 17% to less than 2.10 USD per kilo. Both the price dynamics and the price balance (average export price for fillets was at least 55% higher than the average export price of surimi) evidently never looked in favour of surimi. According to some Japanese specialists, the above situation could lead to a switch of focus from surimi to fillets in season B, even if prices for the Japanese purchases from season A are comparably strong.

As for shipments of Alaskan products to China, market players paid much attention both to a big rise of fillet exports and to no less big rise of headed and gutted pollock exports especially against the absence of hake shipments. March export of pollock fillets from USA to China amounted to nearly 3400 tonnes, nearly 44% or more than 1000 tonnes up on last year, and the total volume of shipments through the first quarter of 2011 grew even more, by 47% namely, to ca.4300 tonnes. Shipments of Alaskan products to China, which were cleared as shipments of headed pollock, in March 2011 practically reached 4000 tonnes, 70% up on last year, and their total volume through the first quarter of the year reached 5500 tonnes to display a rise of 117% on last year.

Price indications and in particular their ratio however caused serious doubts as the average price of fillet exports was reported at 2.40 USD per kilo only, while shipments of headed pollock in March 2011 fetched much higher prices of 2.65 USD per kilo. Through the first three months of the year the prices leveled at 2.80 USD per kilo versus to less than 1.95 USD per kilo.

Cod

Official figures for the US cod exports in March 2011 and first quarter of 2011 highlighted a serious rise of shipments to Japan and a greater activity of shipments to China which made the country one of the main export markets.

In March 2011 the volume of frozen H&G cod exports (mostly from the Bering Sea) to Japan went down by more than 40% on the previous month to less than 1250 tonnes, still more than four times up on March 2010. Actually, March was the month of tragic events in Japan, which touched mostly those areas where processing of Alaskan cod was developed the best of all. The total volume of exports to Japan in January-March 2011 nearly reached 5300 tonnes, 17% up on last year, and the average export price rose by 7% to nearly 3.50 USD per kilo.

As for shipments to China, in the first quarter of the year 2011 the average export price was slightly lower at ca.3.30 USD per kilo, still 16% up on last year. The volume of shipments to China jumped more than twice (namely by 107%) and reached 11,800 tonnes. For comparison, in 2010 the total shipments of frozen cod to China amounted to only ca.14,400 tonnes, therefore already by the start of April 2011 traders shipped more than 80% of the last year volume even despite a very big rise of prices (in 2010 the average export price was slightly above 2.65 USD per kilo). Moreover, a very strong growth (namely by 45% to 3900 tonnes) was registered for shipments of products which were cleared as fresh. Thus, the total shipments approximated 15,700 tonnes, 87% up on the corresponding result for the first quarter of 2010.

Taking into account that the total volume of the US export of frozen cod increased only by 16% to ca.30,000 tonnes through the first quarter of the year 2011, such rise of shipments to China was a definite indication of a serious redistribution of roles between main markets. Summing up the US shipments to China and Japan showed that in the first three months of the year 2011 those two markets won more than 55% of the US exports, while last year by the end of March their total share failed to reach even 35%. Actually the share of the Chinese direction jumped from 22% to 40%. A considerable rise of the cod and haddock TACs for the European countries was evidently one of the main reasons behind such redistribution.

Salmon

Practically simultaneously with the start of the new fishing season in Alaska the Japanese driftnetters began landing salmon harvested in the Russian EEZ.

The Japanese sources reported that the first landings of products from the new season at ports of the eastern part of the Pacific coast of Hokkaido were made 14 May 2011 when four small boats returned to Hanasaki for landing operations. On 16 May 2011 the general activity of landings seriously rose thanks to already six small boats calling at Hanasaki and another two ships calling at the neighboring port of Akkesi for landing.

The bulk of landings was reportedly contributed by fresh, so called spring sockeye, while landings of salted chum salmon and salted sockeye were weak. On the first day of seasonal landings prices for fresh chum salmon at local market auctions ranged from 650-910 Yen per kilo (ca.8.00-11.25 USD per kilo), the range of landing prices for salted chum salmon amounted to 550-830 Yen per kilo (6.80-10.25 USD per kilo).

Prices of salted sockeye even with strongly limited volume of supply remained practically at the level of 1500 Yen per kilo, and minimum prices failed to reach even 1000 Yen per kilo. The market specialists immediately reacted forecasting that after the March earthquake prices for the Japanese products originating from the Russian waters could grow more dependent on the actual demand (as compared to last year) despite a strong reduction of capture quotas and general decline of the fishery activity. The range of salted sockeye prices on the first sales day amounted to 980-1520 Yen per kilo or ca.12.10-18.75 USD per kilo.

Prices began declining already from the second day of seasonal landings. In Hanasaki prices for salted sockeye fell dramatically by more than 10% to 880-1360 Yen per kilo or ca.10.85-16.80 USD per kilo. Prices for salted chum salmon decreased by ca.15% to 500-700 Yen per kilo (6.15-8.65 USD per kilo), while prices for fresh chum salmon at the port descended to 600-860 Yen per kilo (7.40-10.60 USD per kilo) to display a slight decrease of ca.5-7%. In Akkesi prices were even lower as usual.

Dramatic changes of landing prices for salted sockeye and fresh sockeye as compared to last year attracted interest of the market players. More specifically, the highest possible prices for salted sockeye fell by 25-30% on last year, while prices for fresh chum salmon rose by 20-25%. The rise of fresh chum salmon prices was caused by involvement of buyers from neighboring areas, Hokkaido in general and from the north part of Honshu where local fishing and processing facilities strongly suffered from the disaster. At the same time, the dramatic decline of prices for salted sockeye was mostly caused by strong prices last year which caused declining demand and by the fact that a large volume of products from the season of 2010 remained unsold even by the start of landings of products from the new season.

A group of 18 Japanese inshore driftnetters moved to salmon grounds in the Russian EEZ already on 2 May 2011 and their first fishing trip was to finish on 18 May 2011. Middle vessels moved to the grounds with a big delay on the schedule, therefore they should start landing the harvest on the closing days of May 2011 at the earliest.