GLOBEFISH - Information and Analysis on World Fish Trade

Tight supplies and rising prices

24/06/2019

Octopus supplies are tight and will probably remain so throughout the year. There was a 48 percent reduction in the Moroccan quota for octopus. If this low level remains, there will be a supply squeeze. Squid supplies are picking up slightly, but still relatively tight. Demand is good and prices are up.

Octopus resources have been and continue to be under pressure for some time and the situation is not improving. The resource situation is approaching a very serious state. Demand for octopus is rising in several markets, which puts further pressure on the resource. The long-term view is that prices will rise, albeit in the midst of short-term ups and downs.

After the drop in octopus prices between June and December of 2018, prices shot up again in the beginning of 2019. Moroccan authorities set the quota for the winter season at just 19 500 tonnes, 48 percent lower than last year. There has been some speculation that the quotas were set that low in order to support the high prices and that the quota could be increased once it has been filled, by the end of March. Indications are that prices have come down lately. Demand is still high, though.

The octopus fishery in the south west of Madagascar has for long been an important economic activity for the region, and the fishery has been in focus for introducing improvements for over a decade. In February 2019, Madagascar finally announced its first octopus fishery improvement project (FIP), focusing on Madagascar’s southwest octopus fishery, which forms the backbone of the local seafood processing and exporting industry. The primary aim of the FIP is to encourage responsible use of the local octopus stocks, establish long-term economic benefits for communities and businesses and facilitate access to global markets. The plan involves the Blue Ventures Conservation non-governmental organization (NGO), as well as the Marine Stewardship Council (MSC) for Southern Africa. 

Trade

The tight supply situation was reflected in lower imports of octopus into Japan during 2018. Overall, Japanese octopus imports fell by almost 21 percent, from 54 300 tonnes in 2017 to 42 900 tonnes in 2018. All major suppliers registered a decline in shipments, except Viet Nam, who exported 3.8 percent more octopus to Japan in 2018 than in 2017. The Republic of Korea imported less octopus in 2018, although the decline was marginal (-1.8 percent) from 80 300 tonnes in 2017 to 78 900 tonnes in 2018. China was the largest supplier (35 400 tonnes) that saw a drop of 9.4 percent in shipments. All the other important suppliers increased their octopus shipments to the Republic of Korea.

Squid

At the recent Seafood Show Osaka in Japan (20–21 February 2019), “new” sources of squid were presented. Malaysia, where squid has been caught mainly as bycatch with other species, has now entered into dedicated squid fishing and is targeting two species, Loligo chinensis and Loligo sibogae. These species are different from the Japanese flying squid and the Argentine shortfin squid that are the more familiar species on the Japanese market. The new species are frozen at sea and sold round, unprocessed. The Illex fishery off Argentina was off to a good start in mid-February 2019. During the first month of the fishery, a total of 24 700 tonnes were landed, about 24 percent more than during the same period in 2018. Total Illex landings in Argentina in 2018 amounted to 108 300 tonnes, up 9.2 percent compared to 2017.

Spanish shipowners are upset over the presence of Asian vessels in South American waters, especially around the Falkland Islands (Malvinas). They claim that the Asians are giving them unfair competition in the international waters south of the exclusive economic zone (EEZ) of Argentina. The Asian vessels are now mainly Chinese. The Galician fleet fishing in Argentine waters was in place already in early January for the opening of the Loligo fishery. However, the Spanish fleet is also exploiting this resource, albeit under a fishing agreement with Argentina. Nevertheless, the resource is under pressure. While Chinese vessels operating 200 miles off Argentina in December and January had virtually zero catches, Argentine fishers working inside the EEZ had catches that averaged 25–30 tonnes per day. Market demand for squid has been strong, but supplies are limited, pushing prices up.

Squid fishing continued into February and March, and by midMarch, a total of 50 000 tonnes of Illex had been landed. Peruvian squid (Dosidicus gigas, jumbo flying squid) landings were up by about 10 percent to 311 300 tonnes during the first eleven months of 2018. In 2017, landings were low due to El Niño, but landings returned to normal levels in 2018. Fishing for Pacific flying squid in Japanese waters was not good in early January, and as a result, prices more than doubled for raw material that is processed into delicacies like “shiokara”. Prices for imported squid have also increased as a result of the supply shortage. The Pacific flying squid resource in Japanese waters has been on a declining trend for some years. In 2017, landings of this species amounted to about 61 000 tonnes, down 13 percent compared to 2016. In 2018 there was a further decline. In response to this situation, prices have gone up. In 2014, the average price for Pacific flying squid was about JPY 200 (USD 1.84) per kg. By 2016, the price had increased to JPY 600 (USD 5.52) per kg.

Trade

The supply tightening is showing in trade figures. Japan imported 14.8 percent less squid in 2018 than in 2017. Total imports of squid and cuttlefish amounted to 156 000 tonnes in 2018. The main supplier, China, saw a drop of 7 percent in volume, but the country still accounted for 60 percent of Japan’s imports of squid and cuttlefish. Chinese exports of squid and cuttlefish actually increased to 521 500 tonnes in 2018, up just over 1 percent compared to 2017. The main markets included Japan (accounting for 18.4 percent of the total), Republic of Korea (14.0 percent of the total) and Thailand (10 percent of the total).

Chinese imports of squid and cuttlefish fell by 21.8 percent to 229 700 tonnes in 2018. Indonesia strengthened its position as the number one supplier to China, accounting for 78 800 tonnes (34.3 percent of the total). Peru and the United States of America were about equal, at 39 300 tonnes (17.1 percent) and 38 300 (16.7 percent), respectively. US imports of squid and cuttlefish increased by 1.2 percent to 80 300 tonnes in 2018, from 79 400 tonnes in 2017. The main supplier by far was China (60 percent of the total), followed by India (8.8 percent of the total) and Taiwan Province of China (7.6 percent of the total).

Spain is a major market for squid and cuttlefish. Its imports of these commodities increased by 1.7 percent to a total of 296 500 tonnes in 2018. There was a strong increase in imports from the main supplier, Falkland Islands (Malvinas), from 51 300 tonnes in 2017 to 71 200 tonnes in 2018 (+38.7 percent), while the second largest supplier, China, only saw a marginal increase.

Outlook

Octopus may continue to be in short supply this year, especially if the Moroccan quota is not adjusted. If there is no improvement in supplies, prices will continue to rise. Inventories are very low, so there will not be much relief from cold storage, either. The same is true for squid, although we can expect a somewhat easier supply situation, as the fishery in Argentine EEZ appears to be better than in 2018. World demand for both octopus and squid is on the rise and consequently prices will also rise. Among the driving factors in this development is the increasing demand for “exotic” foods. Among the consumers interested in this are the “milliennials” (individuals who reached adulthood around the turn of the 21st century). Their food habits are generally considered healthier than earlier generations, and seafood in general is part of their diet. Octopus is, to some urban westerners, an “exotic” food, and these consumers are developing a growing appetite for it.

In order for this growth to materialize, supplies must also grow. Supplies from capture fisheries are not be expected to be able to support such a growth, so one has to look to aquaculture for any substantial supply growth. But global aquaculture production of octopus is very low. There was a period in the beginning of the century when up to 30 tonnes were produced annually, but recently, this production has fallen to almost nothing. The main problem seems to be that feed costs are too high to make this a profitable operation.

Thus, for supplies from aquaculture to become important, some major breakthroughs in octopus farming are necessary. If supplies are not increased, the result could be rising prices as a result of the growing demand, as seen in the beginning of 2019. In general, squid prices have been climbing upwards and will most probably continue to do so through 2019. In 2018, prices were on the rise as a result of the tight supply situation and this has not improved in 2019. Consequently, prices are going up. 

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