GLOBEFISH - Information and Analysis on World Fish Trade

Supplies slightly up, prices remain high

08/07/2020

Total supplies of groundfish are expected to be relatively stable in 2020. Forecasts show that cod supplies will edge up by 2 percent, while Alaska pollock will remain at 2019 levels. There will also be some increases for haddock and other species. Demand is strong, hence prices are expected to remain high or even rise.

Resources

At the International Groundfish Forum in October 2019, forecasts released for 2020 showed a slight increase in total groundfish supplies (including farmed whitefish) to 7.290 million tonnes, up from 7.288 million tonnes in 2019. Total supplies of Alaska pollock, by far the largest species, are expected to decline slightly from 3.451 million tonnes in 2019 to 3.442 million tonnes in 2020. Landings of Atlantic cod are expected to increase marginally, from 1.131 million tonnes to 1.132 million tonnes, while haddock is expected to rise from 299 000 tonnes in 2019 to 340 000 tonnes in 2020, and saithe from 351 000 tonnes to 369 000 tonnes.

Hake and Pacific cod catches, on the other hand, are expected to decline in 2020. While hake supplies will slide from 1.273 million tonnes to 1.250 million tonnes, landings of Pacific cod will decline from 387 000 tonnes to 365 000 tonnes. The Joint Russian – Norwegian Fisheries Commission in October 2019 agreed to a 738 000 tonne quota for Barents Sea cod for 2020, up by 13 000 tonnes or almost 2 percent compared to 2019. At the same time, the Barents Sea quota for haddock was set at 215 000 tonnes, up 20 percent from 172 000 tonnes in 2019.

The European Union and Norway ended up agreeing on a major cut in the North Sea cod quota for 2020, which was set at 17 679 tonnes, down 40 percent from the 29 437 tonnes in 2019. However, this is still 70 percent above the 10 457 tonnes proposed by ICES.

For the first time ever, the Pacific cod fishery in the Gulf of Alaska will be closed for the 2020 season. It has been known for some years that the stocks were in trouble. In 2014, stocks stood at 114 000 tonnes, but dropped to just 46 000 tonnes in 2017. Soaring water temperatures appear to be causing the rapid decline in stocks. Higher water temperatures already occurred in 2014 and became known as “the Blob”, a very large area of super-heated ocean off the coast of Alaska.

While the US TAC for Pacific cod is set to drop in 2020, the Russian TAC will increase. In December 2019, Russian authorities set the final TAC for Alaska pollock at about 3 million tonnes, up from 2.84 million tonnes in 2019. According to the Pacific Fishery Scientific Research Centre (TINRO), the total Russian biomass of Alaska pollock is 12 million tonnes, which is higher than the average level in recent years. The North Pacific Fishery Management Council in December 2019 set the TAC for Eastern Bering Sea Alaska pollock at 1.425 million tonnes, up 2 percent from 1.397 million tonnes in 2019. Total Alaska pollock supplies from the North Pacific have been declining slightly over the past five years, from 3.476 million tonnes in 2016 to 3.442 million tonnes in 2020. Of the 2020 quota, 1.528 million tonnes were allocated to the United States of America, 1.7 million tonnes to the Russian Federation and 214 000 tonnes to Japan, Republic of Korea and others.

Trade

World groundfish trade is dominated by two species: Alaska pollock and cod. During the first nine months of 2019, it was noted that traded volumes of cod were down, while traded volumes of Alaska pollock were up. However, Norwegian exports of frozen whole Atlantic cod increased slightly, from 38 085 tonnes during this period in 2018 to 40 903 tonnes in the same period in 2019 (+7.4 percent). Norwegian cod exports in 2019 were quite low compared to both 2017 and 2019. In the first nine months of 2017, Norwegian frozen whole cod exports amounted to 47 453 tonnes, or 16 percent higher when compared to 2019.

Dutch imports of whole frozen cod during the first nine months of 2019 continued to decline, from 34 720 tonnes in 2018 to 29 879 tonnes in 2019 (-14 percent). Chinese imports of whole frozen cod also went down during this period, from 147 248 tonnes during the first nine months of 2018 to 132 184 tonnes during the same period in 2019 (-10.2 percent). This decline was not completely reflected in the figures for exports of frozen cod fillets from China, though, as there was only a very slight decline (-1 percent). Chinese frozen cod fillet exports increased to all countries except the United States of America.

For Alaska pollock, the picture was quite different. Russian exports increased by 11.7 percent to 672 326 tonnes. China’s imports of round frozen Alaska pollock went up by 22 percent, to 598 947 tonnes. It seems that some of these imports are actually consumed in China, because re-exports of frozen Alaska pollock fillets did not increase as much as could be expected.

Consumption

United States of America domestic Alaska pollock fillet consumption (114 680 tonnes) appears to have increased by some 50 percent during the first ten months of 2019. This is based on United States of America trade statistics, which show that US production of Alaska pollock products for 2019 was up by 7 percent to 215 500 tonnes. At the same time, exports were down by 8 percent to 131 210 tonnes, and imports of double frozen blocks from China were up markedly.

Iceland is registering an impressive increase in its haddock exports. During the first nine months of 2019, the country’s haddock exports were up by 52 percent to 14 441 tonnes. Fresh whole haddock is the main product, but exports of frozen haddock fillets were also increasing. The United Kingdom is the main market for Icelandic haddock, with a share of almost 80 percent. However, for fresh haddock fillets, the United States of America is the primary market.

Surimi

Surimi production in Japan’s Hokkaido region rose by 32 percent during the first ten months of 2019, to 17 900 tonnes. At the same time, inventories were also very high at 2 441 tonnes, or two times higher than at the same time in 2018.

Imports of surimi into the Republic of Korea decreased during the first ten months of 2019. Imports of Alaska pollock surimi (all from the United States of America) went down by 14 percent to 18 235 tonnes, while Korean imports of other types of surimi declined by 13 percent to 80 697 tonnes. All supplying countries except Indonesia registered declines in shipments.

In the United States of America, exports of other surimis were down by 23 percent by volume during the first eight months of 2019, to 6 553 tonnes, of which 35 percent were exported to Spain, and 24 percent to the Republic of Korea.

Prices

Global cod prices have been on an upward spiral for about five years. Fresh cod prices from Norway increased by 26.4 percent in September 2019 compared to a year ago, and for the period from January - September 2019, prices for fresh Atlantic cod were up by 16.8 percent. Demand for cod, especially fresh cod, is increasing, and this will inevitably keep prices high. For 2020, one must  expect that cod prices will continue high, or even higher, especially in view of the supply outlook.

With prices for H&G Atlantic cod being so high, observers expect buyers will look to the cheaper Pacific cod or haddock as an alternative. The Atlantic cod quota is up by 2 percent in 2020, but the haddock quota is going up 25 percent. With more haddock on the market, the price difference between cod and haddock will become greater than historically, when the differential was around 10 percent. For Pacific cod, the picture is more diffuse. While the United States of America TAC is set to drop, the Russian TAC will increase by 15 percent, and thus the price for Pacific cod is expected to stay at present levels or somewhat lower.

Outlook

There will not be any drastic changes in the groundfish market in 2020. Supplies will rise slightly, with a very modest increase for cod, and a more massive increase for haddock. Alaska pollock supplies are expected to be practically the same as in 2018. The main changes will probably be for prices. Cod prices are expected to stay high or even rise, due to strong demand. Demand for Alaska pollock fillets appears to be increasing in North America, but  it is not so strong in Europe.

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