Groundfish: tighter supplies and higher prices

20/03/2018

The report analyses the market situation until September 2017

The Groundfish Forum predicts a drop in 2018 landings of Alaska pollock and cod. Estimates published during the 2017 Forum indicate a total supply of groundfish amounting to 7.355 million tonnes, a 3 percent drop compared to 2017. Groundfish prices are expected to rise.

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The Groundfish Forum predicted that landings of Atlantic cod will amount to 1.245 million tonnes in 2018, down by 6 percent compared to 2017. Haddock landings will drop by 8.8 percent to 331 000 tonnes, Alaska pollock landings will fall by 2.6 percent to 3.4 million tonnes, and Pacific cod will be reduced by 3.8 percent to 410 000 tonnes. But landings of saithe are likely to increase by 12.3 percent to 412 000 tonnes, while Atlantic redfish will be stable at 182 000 tonnes. Hake catches are also expected to be stable at about 1.1 million tonnes. Hoki catches are expected to increase marginally by 3.5 percent to 206 000 tonnes. Southern blue whiting will increase by 14 percent to 57 000 tonnes and Northern blue whiting will jump from 1.2 million tonnes to 1.56 million tonnes (+31.9 percent) in 2018.

These estimates were presented in October 2017, and since then, several TACs have been set. The Russian Federation and Norway have agreed on a Barents Sea cod quota for 2018 at 775 000 tonnes, which represents a 13 percent cut compared to 2017. However, this is slightly higher than the International Council for the Exploration of the Sea (ICES) recommendation, which was 712 000 tonnes. The haddock quota set by the two countries will be reduced to 202 305 tonnes, down from 233 000 tonnes in 2017.

The Russian Federation reduced the total TAC for Alaska pollock by 5.8 percent to 1.781 million tonnes, according to the Ministry of Agriculture. This reduction was less than what was expected beforehand. In the Sea of Okhotsk, the TAC was set at 966 000 tonnes, while in the western Bering Sea, the TAC was set at 392 800 tonnes.

The quota for Pacific cod in the Gulf of Alaska is likely to fall by as much as 80 percent. The North Pacific Fishery Management Council (NPFMC) called for such a massive reduction recently. The TAC for 2017 was 64 442 tonnes, but NPFMC has suggested that it be cut to just over 13 000 tonnes in 2018. This radical reduction was based on scientists warnings that the stocks may be in danger.

The overall picture for Pacific cod is not quite that bleak. The Groundfish Forum predicted that the US and Canadian catch will decrease from 270 000 tonnes in 2017 to 250 000 tonnes in 2018, while the Russian Federation catch is expected to increase slightly from 96 000 tonnes to 100 000 tonnes.

Trade

Europeans are consuming more whitefish and other seafood. A study published recently by the European Fish Processors and Traders Association (AIPCE-CEP) showed that finfish imports into the EU28 increased by 2.4 percent in 2016, to 9.2 million tonnes. Consumption of seafood per person increased from 23.9 kg per person to 24.5 kg per person per year from 2015 to 2016. While all species showed increases, cod was particularly available in the market. Supplies of Alaska pollock have also been good.

Germany imported 5.4 percent more Alaska pollock during the first nine months of 2017 than during the same period in 2016. German imports amounted to 102 500 tonnes. China alone accounted for 50 percent of that, but even so registered a 10.6 percent drop in its shipments to Germany. US exports of Alaska pollock to Germany increased by 18.2 percent, to 33 500 tonnes.

German cod imports fell slightly to 22 900 tonnes (-3.4 percent). China was the dominant supplier, accounting for almost 65 percent of the total.

Russian Federation exports of Alaska pollock increased during the first nine months of 2017 by 13.7 percent, to 675 300 tonnes. China absorbed 76 percent of this, while the Republic of Korea took almost 22 percent, leaving only 2.3 percent for others.

Prices

Atlantic and Pacific cod prices are likely to increase in 2018 as a result of the reduced quotas. Though the agreed quota decrease was slightly less than predicted. Still, this reduction of 115 000 tonnes will be felt in the growing cod market. Sellers are careful about pushing the price too high, as there is ample competition from other whitefish species, such as Alaska pollock and saithe. The buyers who depend of the spot market are likely to be impacted more than companies buying large volumes on long-term contracts.

Prices for headed and gutted (H&G) Atlantic cod on the Chinese market are rising. In September and October of 2017, the price for 2.5 kg H&G cod in China was about USD 3 650–3 700 per tonne. By November, the price had risen to USD 3 800, and it was expected to soon hit the USD 4 000 mark.

Alaska pollock producers mainly in Alaska are optimistic about price rises, primarily as a result of the growing demand. Demand for surimi has been good for a while, and currently the demand for deep-skinned Alaska pollock fillet block is also increasing. A slight reduction in landings in 2018 will also push prices up.

Alaska pollock producers in the Russian Federation are optimistic about block prices in 2018, due to the effect of the lower quotas and the growing demand on the domestic market and in Europe. Russian Federation production of single-frozen fillets is expected to continue to grow, according to a spokesperson for the Russian Pollock Catchers’ Association.

Expectations of a substantial cut in the quota for Pacific cod caused price increases in the US West Coast during the autumn of 2017. Normally, Pacific cod prices have been slightly lower than prices for Atlantic cod, but in October prices for Pacific cod were higher than those for Atlantic cod. Prices for medium-to-large sizes of headed and gutted Pacific cod bound for the Japanese market were USD 4 500–4 600 per tonne, and about USD 4 600–4 650 per tonne for the European market.

US imports of cod during the first nine months of 2017 amounted to 47 300 tonnes, up by 3.3 percent from 45 900 tonnes in the same period in 2016. China emerged as the major supplier by far, accounting for 75 percent of the total.

On the UK market, haddock and cod sales were up during the 12-month period from October 2016 to October 2017, according to A.C. Nielsen. Cod sales rose to 48 600 tonnes (+3.2 percent), while haddock sales rose to 20 200 tonnes (+4.1 percent). However, the price rise made the value rise somewhat stronger: +5.2 percent for cod to GBP 399 million (USD 530.8 million) and +5.3 percent for haddock to GBP 205.6 million (USD 273.5 million).

Demand for Alaska pollock blocks on the Russian Federation market is growing fast, according to the Russian Pollock Catchers’ Association. During the first six months of 2017, Russian Federation companies sold 27 000 tonnes of Alaska pollock blocks on the domestic market, up by more than 100 percent compared to the same period in 2016, when 13 000 tonnes were sold.

During the first three quarters of 2017, China imported 158 100 tonnes of cod and 582 400 tonnes of Alaska pollock. This represented an increase of 1.3 percent and 13.7 percent, respectively, compared to the same period in 2016. But the country exported less cod fillets and Alaska pollock fillets. This seems to indicate that the difference is diverted to the domestic market, suggesting that the Chinese market for whitefish is growing.

Following the thawing of Chinese-Norwegian diplomatic relations, Norwegian seafood exporters are gearing up for a massive increase in sales to China. The market potential for cod in China appears to be very good, and Norwegian exporters are now expecting a four-fold increase in cod exports to China, from just over 30 000 tonnes in 2016 to over 120 000 tonnes in a few years’ time. As the Chinese domestic market for cod develops, it is less likely that processing will be shifted back to Europe.

 

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