During the G20 meeting in Osaka in June, the United States of America and China announced that they would go back to the negotiating table to put an end to the trade war. Meanwhile, lobster supplies are getting tighter, especially on the US East Coast because of short supplies of herring for bait. Consequently, prices may edge upwards.

Supplies

Lobster fishers on the US East Coast are worried about further cuts in 2020 in their herring quota, as herring is the main baitfish for lobster. The quota has already been dramatically reduced and a further reduction would bring it to just one fifth of the quota in 2014. Such a cut would mean lower lobster landings, and that could push up prices. In Canada, the spring season started a few days later at the beginning of May, due to bad weather. Fishers got a few days of extension in the beginning of July, but now the spring season is over.

In Western Australia, lobster fishers and the authorities agreed in February that the industry would supply an extra 315 tonnes of rock lobster for domestic consumption and for a lobster festival. More lobster for the local market would be desirable for the local population and it would also be a big boost for the tourist industry, according to Fisheries Minister Dave Kelly. However, the extra quota was presented with conditions that were not acceptable for lobster fishers and now the agreement has been called off. Almost all of Western Australia’s lobster catch is exported.

International trade

Global imports of lobsters (all types and product forms) declined by 4 percent to 32 800 tonnes during the first quarter of 2019 compared to the same period in 2018. The biggest drop was registered by the United States of America, which saw lobster imports drop by 21.5 percent, from 11 100 tonnes in the first quarter of 2018 to 8 700 tonnes in the same period in 2019. China increased its imports by 17.1 percent to 12 600 tonnes.

Canada increased lobster exports by 5.1 percent during the review period, from 15 500 tonnes in 2018 to 16 300 tonnes in 2019, whereas US lobster exports fell by 28.7 percent to just 5 000 tonnes. Maine lobster exporters have been focusing heavily on China as their prime market. As much as 84 percent of Maine lobsters are exported to China. After the retaliatory tariffs were invoked, Maine’s lobster exports to China plunged by 84 percent. Nevertheless, alternative markets have been found for most of the drop. A larger share of the production went to the domestic market. US lobster exporters are having problems in the EU28 as well.

The European Commission threatened to put a retaliatory tariff on many US products, including seafood. Sales of US lobsters to the EU28 dropped by almost 50 percent between 2016 and 2018, from 9 300 tonnes in 2016 to just 4 800 tonnes in 2018. The main reason for this change is the Comprehensive Economic Trade Agreement between Canada and the EU28, which made EU28 importers shift to Canadian suppliers because of the abolition of the 8 percent EU28 tariff on live Canadian lobsters and the promise of lifting the 16–20 percent tariff on value-added lobster products over the next five years.

Prices

The marketing body for Canada’s Prince Edward Island highlights that while landings are better this year than in 2018, lobsters are earning less because of lower prices. In general, prices for small lobsters are down, while for larger lobsters they hold their own. In the rest of Canada, raw material prices were quite stable throughout the season, but a bit higher compared to last year.

This resulted in higher prices for whole lobster than in 2018, though there was a new drop in import duties because of the CETA agreement, which made up for a part of the increase. On the US market, prices for lobster tails have been on an upward trend since late 2017. In the EU28 the trend is also pointing upwards.

Outlook

The hopes of new trade negotiations between China and the United States of America were rekindled at the G20 meeting in late June. The industry seems to have a more optimistic view of the immediate future and that the situation could return to normal. Demand for lobster in China is great, but the outlook for supplies is not all that good. Consequently, one might expect prices to go up. The raw lobster tail market in the United States of America is still very demanding. Prices remain very high, but they might drop soon, depending on the supply of rock lobster.

The season in Central America just started, and further price developments in the United States of America will depend on the arrivals from this side. The trade war has brought a change in the relative positions of Canadian and US exporters, with the US exporters finding it harder to sell their lobster in China and in Europe.

It may take some time to rebuild confidence in the marketplace, at least under the present US administration. The thawing trade relations between the United States of America and China may suddenly turn cold again. Predictability and consistency of policy is needed for trade to flourish and at the moment there is very little predictability in the trade relations between the United States of America and China.