Tight supplies and high prices

10/09/2019

Lower octopus quotas in Morocco will mean a tighter supply situation, and probably rising prices. For squid, supplies might be a bit better, but squid prices keep climbing slowly on major markets.

Octopus

Octopus fishing in North Africa started on 15 June in Mauritania and on 1 July in Morocco. The quota was small, about one third of the winter quota, and consequently prices shot up again. Initial prices were 6–7 percent higher than in December 2018. However, the high prices have forced some importers to switch to poorer qualities and some companies in the hotel, restaurant and catering industry (HORECA) have dropped octopus altogether. It has become difficult to find octopus on the Spanish market because many retailers stay away from octopus, fearing to get stuck with quantities of unsold product due to the high price.

As global demand for octopus increases, efforts to develop aquaculture production have increased. So far, the technology turned out to be difficult, and no-one has succeeded on an industrial scale. Scientists are still hopeful and expect that with further investments, research and testing, a proper technology for farming octopus may become a reality soon.

Trade

During the first quarter of 2019, Japanese imports of octopus were level with imports during the same period in 2018. There was a slight shift in the relative importance of the major suppliers as China shipped somewhat more (2 600 tonnes compared to 2 200 tonnes in 2018), while Morocco shipped less (1 900 tonnes in 2019 compared to 2 400 tonnes in 2018).

The Republic of Korea imported more octopus during the first quarter of 2019 (18 300 tonnes compared to 16 400 tonnes in the first quarter of 2018). Viet Nam shipped more octopus to the Republic of Korea, while China registered a small decline in shipments to the Republic of Korea during this period compared to the same period in 2018. Viet Nam shipped more octopus to the Republic of Korea, while China registered a small decline in shipments to the Republic of Korea during this period compared to the same period in 2018.

Squid

The Argentine Illex season was a bit of a disappointment this year, but just as the season seemed to be over, another opportunity opened up in the northern waters of the country. The National Institute of Fisheries Research and Development (INIDEP) suggested that fishing of Illex in the northern sector from 15 July to 31 August should be allowed. There is an apparent abundance of squid in that region, which gives the industry an opportunity to improve its results this year.

Loligo catches by the Galician fleet operating in the Falkland Islands (Malvinas) waters have been very good during the first season of 2019, which closed at the end of April. The Spanish fleet, which returned to Vigo after ending the fishing, caught about 51 000 tonnes, a record catch for the spring season. The new giant squid law in Chile has created a bit of a controversy and uncertainty in the industrial fisheries sector in the country. So much that the country’s Minister of Economy, Development and Tourism has now promised to push for changes in the law. The law restricts the capture of giant squid to artisanal handline fishers and will go into effect in August. However, strong protests from the industrial fleet and especially the crews in this fleet, have prompted the Minister to take another look at the law. The workers claim that the law will put hundreds of them out of work and cause economic problems for a number of the fishing companies.

Trade

Squid consumption in the United States of America is very low. At four ounces (113 grams) per person per year, that equals about one serving of calamari rings. Some companies view this as an opportunity. Eating habits in the United States of America are changing, and it is particularly the “millennials” (those born between 1980 and 2000) who are leading this development. They are open to trying new foods, which coupled with active product development on the part of the processors, is expected to push squid consumption up. For several years, the United States of America imported around 70 000 tonnes of squid per year, but in 2018, there was an increase to over 74 000 tonnes. During the first five months of 2019, US squid imports jumped by 64 percent compared to the same period in 2018.

Peru is experiencing increasing demand for its giant squid, particularly from Asia, but also from Europe. China, the Republic of Korea and Thailand are all buying more squid from Peru. The country expects 2019 to be a good year for squid exports. In 2017, the trade was hit be the effects of El Niño, but recovered in 2018, and so far, it looks quite good for 2019.

In the first three months of 2019, Peruvian exports of squid reached 68 500 tonnes, more than double the amount exported in the first quarter of 2018. China was the main buyer of squid from Peru, increasing shipments from 3 000 tonnes in the first quarter of 2018 to over 27 000 tonnes in the same period of 2019.

During the first quarter of 2019, Japan increased its imports of cephalopods by 10 percent by volume and 11.1 percent by value compared to the same period in 2018. Total cephalopod imports during the review period amounted to 11 700 tonnes valued at USD 77.6 million. Processed products showed the greatest increases. Processed cuttlefish and squid increased by 78.3 percent in value, to USD 60.7 million, while processed octopus increased by 19.7 percent, to USD 15.3 million.

Landings of Japanese flying squid (Todarodes pacificus) were quite good in the beginning of the year, and significantly better than last year. Even so, prices for Todarodes are still high. Prices for Todarodes tend to follow the Illex prices, regardless of the actual supply situation for Todarodes. Spanish imports of squid and cuttlefish slightly declined to 49 300 tonnes in the first quarter of 2019, from 50 900 tonnes in the first quarter of 2018. Larger volumes came from the Falkland Islands (Malvinas) and less from China.

Japanese imports of squid and cuttlefish amounted to 30 698 tonnes in 2019, practically the same as during the same period in 2018. As much as 68 percent of Japan’s total imports of squid and cuttlefish during this period came from China. China experienced an 18 percent drop in its exports of squid and cuttlefish during the review period, from 131 100 tonnes in 2018 to 107 500 tonnes in 2019. The biggest drop was registered for exports to the Republic of Korea.

There was a noticeable increase in China’s imports of squid and cuttlefish during the first quarter of the year, from 42 100 tonnes in 2018 to 64 000 tonnes in 2019. US imports of squid and cuttlefish fell during the first three months of 2019. In 2018, US imports amounted to 17 700 tonnes, while in 2019, the amount dropped to 13 200 tonnes. Most of this was due to a massive drop in imports from China, from 10 900 tonnes in 2018 to 6 100 tonnes in 2019.

US imports of squid and cuttlefish fell during the first three months of 2019. In 2018, US imports amounted to 17 700 tonnes, while in 2019, the amount dropped to 13 200 tonnes. Most of this was due to a massive drop in imports from China, from 10 900 tonnes in 2018 to 6 100 tonnes in 2019.

Prices

Over the past year, octopus prices have varied a lot. In the summer of 2018, prices were sky high in some markets, as a result of several factors. There was a limited supply from Morocco because of stricter fisheries management, better economic conditions in important markets like Spain and Portugal, and growing popularity of octopus in new markets like the United States of America and northern Europe.

Because of the high prices, some traders started sourcing octopus in countries they had not bought from earlier, like Thailand, China, and Yemen. Mediterranean consumers did not like what they got. They claimed the quality was poorer and some restaurants cut octopus from their menus because of this. Consequently, prices fell again.

The rollercoaster performance of octopus prices caused problems for a number of traders, especially those who bought large amounts at high prices, and later were stuck with stocks they had to take a loss on. Many traders are now trading at a loss. But they keep trading because they know that the situation will return to normal, although it may take another year or so.

Many traders expected squid prices to continue to climb, after early reports of poor fishing of squid this year. The supply situation may be a bit better than first thought, but demand is good and prices will stay high in the coming months. Prices for Argentine Illex squid are high and rising, as landings have come to a standstill. Landings from January to April amounted to 90 000 tonnes, but in May, Argentine vessels landed only 28 tonnes in Argentine ports. Squid prices in Europe have been rising slowly for some time and are expected to continue on this trend. Average import prices in the United States have also edged upwards.

Outlook

The small quotas for octopus in Morocco imply that the supply situation will be tighter in the second half of the year. Demand in general is good and new consumer groups are developing a taste for octopus as well as squid. This should push prices up further and hopefully stabilize them after a rather turbulent year. The supply situation for squid is a bit more varied, with good catches by Spanish vessels fishing off the Falkland Islands (Malvinas), though other squid fisheries are not as good. Landings in Argentina have been poor, although one hopes that the opening of the northern region could rectify that. There is good demand from Asia, not only China, and prices will continue their steady climb upwards.

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