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GLOBEFISH - Information and Analysis on World Fish Trade

Octopus prices hit the ceiling of consumer resistance

11/04/2019

Very tight supplies in 2018 forced prices up to the point where buyers started seeking substitutes. When the ceiling was reached, prices started to drop again. Supply is still very tight though, and the same is true for squid. This situation is expected to continue throughout 2019.

Octopus

During the first half of 2018, octopus prices hit record levels. Demand was good, supplies were tight, and prices went up. They went so high that buyer resistance set in, and during the last few months of 2018, prices began to fall as restaurants moved to cheaper products. Observers in the market agree that a ceiling was reached. 

Trade

The tight supply was reflected in reduced world trade in octopus during the first nine months of 2018. Japanese imports of octopus fell by 24 percent to 29 600 tonnes during this period. The largest cuts were in shipments from Mauritania and Morocco. Imports into the Republic of Korea were also down by 11 percent, to 52 100 tonnes. The main supplier to the Republic of Korea was China, but Chinese shipments declined from 27 800 tonnes in the first nine months of 2017 to 23 200 tonnes in the same period in 2018 (-16.7 percent). 

Squid

The poor catches of Argentine shortfin squid (Illex argentinus) and Japanese flying squid (Todarodes pacificus) in 2018 are forcing producers to search for substitutes. Chinese vessels have been catching large amounts of jumbo flying squid (Dosidicus gigas), and are trying to offer this as a substitute to Illex and Todarodes products. However, European consumers do not like the taste and the texture of this species. In Southeast Asia, on the contrary, this species is well accepted. In Japan, Todarodes is being replaced by jumbo flying squid in some sushi products.

Surimi-like products are starting to appear on the squid market. A Spanish producer recently presented “pre-formed” squid rings as a substitute to scarce and high-priced real squid rings. The raw materials used usually include a paste of Illex squid, jumbo flying squid, pollock, water and starch. The rings are formed through extrusion. This product development seems to be due to the past three bad squid fishing years (2016–2018), which have put pressure on prices. This product is being tested in Spain and other European countries. Sales of battered and breaded “pre-formed” squid rings are rising.

While overall landings were down, catches within Argentine waters were good. Argentine vessels landed 107 800 tonnes of Argentine shortfin squid in 2018. A lot of Chinese vessels operated there in 2018, but with very poor results. Outside Argentine waters, there was very little squid. Catches of giant squid (Dosidicus gigas) in Peruvian waters were down by 30 percent during the first nine months of 2018, mainly due to the many Chinese vessels fishing in Peruvian territorial waters, since Chinese catch is not registered in Peru. Since all Peruvian squid boats are artisanal, they are out-competed by the Chinese industrial fleet, and landings in Peru consequently went down. According to one estimate, Chinese vessels caught about 230 000 tonnes of giant squid in the southwest Pacific during the first ten months of 2018. The squid is also quite small and authorities are worried about the sustainability of this fishery. Meanwhile, prices for raw fillet of giant squid have risen from USD 2.80 per kg in 2017 to USD 3.20 per kg in 2018.

Squid landings in Japan were down by 20 percent during the first nine months of 2018. The previous year had already been a disappointing year, with total yearly landings amounting to just 53 000 tonnes, a dismal harvest compared to the 200 000 tonnes landed in 2011. There are several reasons for these poor landings. First, hundreds of vessels from the Democratic People’s Republic of Korea are fishing at the edge of the Japanese economic exclusive zone (EEZ), putting pressure on the resource. Second, water temperatures in the squid breeding grounds were lower in 2018 and juvenile survival rates were down. Finally, higher water temperatures in the area north of Hokkaido kept the squid longer in that area. While supplies of giant squid are good because of Chinese catches, supplies of Argentine shortfin squid (Illex argentinus) are tight, and prices are up. Coldstorage holdings of Illex and Japanese flying squid are very tight at the moment, and consequently prices are very high. 

Trade

Squid imports into Japan decreased by 15 percent to 118 000 tonnes during the first nine months of 2018. China reduced shipments and so did other suppliers. However, total Chinese exports of squid and cuttlefish during the review period actually increased slightly compared to the same period in 2017, from 360 400 tonnes in 2017 to 361 500 tonnes in 2018. The largest market was Japan, which represented 19 percent of total Chinese squid exports. Global squid exports to China increased during this period, from 168 000 tonnes in 2017 to 211 000 tonnes in 2018. The main supplier to China was Indonesia.

Spain also registered increased imports of squid and cuttlefish during the review period. A total of 235 000 tonnes were imported in the first nine months of 2018, compared to 227 300 tonnes in the same period in 2017. Squid imports into the United States of America were stable during the review period. A total of 57 000 tonnes were imported during the first three quarters of 2018, compared to 61 000 tonnes during the same period in 2017.  

Squid imports into the United States of America were stable during the review period. A total of 57 000 tonnes were imported during the first three quarters of 2018, compared to 61 000 tonnes during the same period in 2017. 

Outlook

The shortage of octopus, squid and cuttlefish will continue during 2019. The octopus fishery is under pressure, and it is not expected that landings will improve much in the near future. Prices were at such a high level that consumer resistance set in during the second half of 2018, and this is likely to continue for some time, as supplies will still be very tight However, it is expected that sellers will have to reduce their prices in order to move product.

It is early to predict how the new octopus season in Morocco will be, and how it will affect prices. The season was expected to start in mid-December and buyers are expecting prices to fall further as supplies pick up again. The Moroccan industry is anticipating good catches in the new season, as there is reportedly a lot of octopus in the sea. The first landings are not reaching European markets until early January because of transport times and therefore sales have to rely on existing stocks.

In the squid trade the situation is the same, with very tight supplies and a longer-term uncertainty about the sustainability of several stocks. As supplies are getting scarcer, prices will go up, and the image that squid has in some markets as an inexpensive seafood item may change. As it looks currently, the supply is not likely to improve in the short to medium term, and squid prices will remain high in 2019.

Argentina’s shortfin squid (Illex argentinus) season starts in January, and the industry is hoping for a season similar to 2018. Producers in Argentina are hoping for larger sizes, since in 2018 the average sizes were just 200–300 g, while in previous years they were 300–500 g. The season usually lasts from January to August, but in 2018 the season was closed in May. In December, a large number of Chinese squid jiggers were either waiting just outside the Argentine EEZ at 42–45 degrees south, or on their way to the area. According to some reports, 60–70 vessels were already in place, while more were on their way from Peruvian waters.Argentine fishers and authorities alike are frustrated by the number of Chinese vessels fishing on this resource.It is high time to introduce better international regulations and better management of these resources in order to protect and revive the resource. One solution might be to make the squid resource the responsibility of the Regional Fisheries Management Organizations.

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