The conventional large markets for canned tuna show some improvement this year but raw material supplies will be low till October.

The frozen skipjack price remains strong at USD 2 300-2 400/tonne for delivery to Bangkok. During early June, there was a softening in the price to USD 2 150/tonne that lasted for a short period. Marketers indicate that prices have bottomed out and could possibly increase again in a short time.

In the high-end sashimi and non-canned tuna trade, demand remains low this year in the largest market, Japan. However, the positive trend continues in the US market, which could be considered as the second most important market for non-canned tuna including sashimi tuna.

Supply

Catching in the Indian Ocean is being affected by bad weather and strong currents. The situation in the Eastern Tropical Pacific is not very good either, although processors in Ecuador have enjoyed strong demand as the price of tuna raw material has been lower than in Bangkok for the past few months. This has given a clear cost advantage to the Latin American producers, especially in the EU market. With increased demand for fish, the price of skipjack has been firm at USD 2 150/tonne to USD 2 200/tonne ex vessel Manta.

Adverse environmental conditions have affected fishing efforts in the Indian Ocean. A number of vessels suffered some damage to nets and other equipment further limiting their capabilities. Therefore prices have increased, even if only slightly, to EUR 1 670/tonne for skipjack and EUR 2 400/tonne for yellowfin 10kg and up FOB Seychelles.

Catches were also lower in the Western Pacific where the 4-month FAD closure is underway from 1 July to 31 October. Several fleets are planning to perform maintenance and repair works during the closure period.

For bigeye sashimi tuna, lower supplies of Indian Ocean origin are forecast because of the shift in fishing to albacore tuna in the cooler water area of the southern Pacific Ocean.

For Atlantic bluefin tuna, the closed fishing season including purse seine and trap fishing in the Mediterranean starts from 10 June for the EU fishing nations. The 2013 quota of 7 548 tonnes fixed for the EU countries was exhausted before then.

In the Western Pacific, Kiribati has signed a fishing agreement with the European Union to replace the agreement that expired in September 2012. The new agreement will give Kiribati a fee of USD 1.71 million and allow EU fishing vessels to catch 15 000 tonnes of tuna annually in the EEZ waters. The agreement also stipulates that if the annual catch limit is exceeded, there will be an extra fee of EUR 250/tonne imposed for the first additional 2 500 tonnes and a further EUR 300/tonne for the next 2 500 tonnes.

The EU has also signed another agreement with Gabon that gives EU fishing vessels access to 20 000 tonnes of tuna in the country’s territorial waters and is valid for 3 years.

Market Trend

Since the beginning of this year the sashimi market in Japan has remained unattractive to local and foreign suppliers. This situation can be directly linked with the weaker yen. High fuel prices reduced fishing efforts for coastal tuna fisheries and imports have also slowed down, even for the popular frozen loins and fillets.

In contrast, the US market for non-canned tuna, particularly frozen loins and steaks has been stable despite the rise in average import prices. For canned tuna the market seems to have taken a positive turn as well. Compared with last year, the trend in the EU canned tuna market also looks positive.

Tuna packers in Asia seem to be able to adapt well to the high skipjack raw material price while consumers in major markets are slowly accepting the higher canned tuna price. There are positive indicators that demand for canned tuna has shown some improvement as a result of ongoing promotion and product innovations carried out by major suppliers as well as the growing popularity of private (supermarket) brands.

Japan

This year, local sashimi boats have reduced fishing efforts in the coastal waters resulting from the weakening yen and the increased cost of fuel, which is imported This factor has also affected catches in distant waters. Overall tuna landings in Japan posted a 13% decline during the first quarter of this year compared with the same quarter last year. Fresh skipjack landings, however, were 46% higher. In the sashimi market, local skipjack is a popular and cheaper substitute for other red meat tuna, such as yellowfin and bigeye.

The Spring festival season, which falls in April-May, is one of the peak consumption times for sashimi tuna in Japan. However, this year overall tuna trading at wholesale markets was much lower than the usual average in May according to the latest report released by the government. Sales of locally farmed bluefin and other imported sashimi tuna were lower than previous years during the first five months of the year. Overall supply was low from domestic and foreign sources, affected by the weaker yen against major foreign currencies. While the yen remains above JPY 100 for USD 1, import prices for all types of seafood have increased by 20-30% compared with last year.

As of June, the inventory level of low quality bigeye tuna of Indian Ocean origin (caught off Somalia), was considerably lower at about 500 tonnes compared with 2 500 tonnes reported during January/February. However, the stock level for Mexican farmed bluefin tuna was high at 2 500 tonnes because of slowing demand in the market.

The sluggish market demand during the hot and humid month of June is normal and consumer demand shifts towards tataki or grilled skipjack and other seasonal seafood such as salmon, pike mackerel and squid. Sushi restaurant chains, particularly the kaiten sushi restaurant operators, continue to opt for cheaper alternative species such as salmon and marinated mackerel. Supermarkets are still maintaining last year’s prices, although import prices have gone up considerably. In retail trade, there is strong resistance to price rises from end consumers.

Imports of fresh and frozen tuna also declined during the first quarter of this year to 57 528 tonnes, which is 12% lower than last year.

While air-flown imports declined by 3%, the drop was sharper for frozen tuna at 20% during the first quarter of this year, compared with the same period last year. With the exception of bigeye tuna, lower supplies were registered for all other types, including a significant drop for frozen skipjack of -69% indicating lower requirements from katsuobushi and canned tuna processors in Japan. In order to adjust to high raw material prices, Japanese tuna packers have reduced their canned sizes from 80g to 70g per can.

Imports of frozen bluefin loins from the Mediterranean were higher than last year as more fish is being processed into frozen loins for longer storage life. However, for the first time since 2010, supplies of red meat quality frozen tuna loins fell behind that of last year, a factor that marketers link to the cheap yen.

USA

Last year the US imported more than 163 000 tonnes fresh/frozen tuna, which was 2.5% higher than the year before. This development is largely linked to improved demand for non-canned tuna, particularly frozen loins and steaks, among others. The total value of these imports was USD 1.06 billion in 2012 against USD 737.94 million in 2011.

The stable trend in the non-canned tuna market segment is continuing this year, which is reflected in January-March import data for fresh tuna as well frozen tuna loins. Import growth for the latter has been impressive, largely dominated by supplies from Southeast Asian countries, namely Indonesia, the Philippines and Thailand.

Canned tuna: signs of recovery in major markets despite high prices

USA

The US market showed signs of recovery this year thanks to the positive trend in the retail sector. According to the US Census Bureau retail and food-service sales posted positive growth this year and rose 0.6% in May to USD 421.1 billion while canned tuna imports also increased significantly. During the first quarter of 2013 imports of canned tuna were up 22% in volume and 30.9% in value year on year, amounting to 47 800 tonnes worth USD 271 million. Imports of tuna in pouch were up by 20% in quantity.

Confronted with increasing costs and the highly competitive US market, major tuna suppliers introduced more premium products and intensified promotional activities. Bumble Bee Foods, for example, has introduced three new additions to its gourmet-style prime albacore tuna fillet. The company also introduced its new Marine Stewardship Council (MSC) certified canned albacore and light meat tuna that will be available in the market this year. Competitor Chicken of the Sea International (COS) is focussing on innovation and renovation with the emphasis on nutrition and convenience factors and is increasing its marketing and advertising budget to achieve sales growth of 8% this year.

Competition in the US canned tuna market is expected to be tougher in the future when the Trans-Atlantic agreement with the EU is signed, allowing better market access for canned tuna from Europe. Negotiation between the two sides is on-going and US tuna packers have already expressed concern about the impact of the agreement on the US canned tuna industry.

Europe

The European canned tuna markets also moved in a positive direction this year. In the difficult economic climate consumers have turned to cheaper brands and as a result private labels are growing fast in some major markets such as Spain, Italy and Germany. To defend their market share, established brands are trying to stay one step ahead by aggressively promoting their new products. UK-based Princes has added a line of "deli-inspired" tuna-based products to its range of sandwich fillers to encourage more frequent purchases. Rio Mare of Italy introduced its iTuna app offering more interactive features so that consumers with mobile phones can access product information via internet.

Up to April this year imports of canned tuna into the EU increased by 15.5% in volume and 33.8% in value year on year, amounting to 128 247 tonnes worth USD 7 334 million. The issue of illegally caught tuna from West African origins entering the supply chain in the UK did not prevent more products being imported into the country. During the first quarter of 2013 canned tuna imports into the UK posted positive growth at 4% with more shipment recorded from Ghana (+19%) and Thailand (+10%) compensating for lower imports from Mauritius (-3%), Seychelles (-7%) and the Philippines (-31%).

Similarly the price sensitive German market also imported 4% more this year with more supplies coming from Thailand (+67%) and Ecuador (+53%), but shipments from the Philippines, the market leader, and Papua New Guinea declined by 20% and 8% respectively.

Ecuador packers also did well in France and shipped 20% more in the first quarter but in spite of this the overall imports into the market shrank by 11%. The sharp drop in supplies from Seychelles (-25%) and Thailand (-18%) could not be offset by higher shipments from other sources.

Ecuador and the Seychelles increased supplies somewhat to Italy but overall imports into Italy declined by 23% as there was a significantly lower supply from Spain (-36%). According to Nielsen, sales volume of canned tuna decreased by 2%, from 108 000 tonnes in 2011 to 106 000 tonnes last year but sales value rose by 1.3% totalling EUR 1.03 billion. The declining sales of canned tuna also affected the imports of pre-cooked tuna loins into Italy, which fell by 12% in quantity during Q1, thanks mainly to lower supply from Thailand (-41%) and in spite of higher imports from Ecuador (+28%).

Meanwhile Spain took full advantage of the EU duty free import quota rule for pre-cooked tuna loins from Asia. For Q1 2013 Spain imported 24.5% more pre-cooked tuna loins compared with the same period of 2012 with significantly increased supplies from China (+192%) and Thailand (+200%), while imports from Latin American sources declined.

Asia

ASEAN countries and China have become the main targets for market expansion by packers in the region. Thai Union (TUF) said that it is now focusing more on ASEAN markets to serve the upcoming ASEAN Economic Community. Priority target markets in the region are Indonesia, Cambodia, Laos, Myanmar and Viet Nam. Meanwhile the Republic of Korea’s Dongwon has been seeking opportunities in China by signing a contract with Chinese retail giant Bright Food Group. Dongwon said the value of China’s canned tuna market is estimated to be USD 45 million.

Despite increasing production costs and the strengthening baht, Thai canned tuna exports showed strong resilience and posted positive growth this year. After a sharp drop (-25%) last year, canned tuna exports grew by 3% both in quantity and value during the first quarter of 2013, totalling close to 105 000 tonnes valued at THB 14.8 billion (USD 501 million). Increasing sales to key markets as well to new emerging markets contributed to this growth. Exports to USA, Canada, UK and Saudi Arabia increased by 7%, 15%, 123% and 26% respectively in volume, which somewhat offset lower shipments to Egypt (-48%), Australia (-5%), Japan (-5%) and Libya (-3%).

Meanwhile the high canned tuna price in the global market coupled with the weakening yen has affected the canned tuna market in Japan as indicated by the negative trend in imports this year. During the first quarter of 2013, imports declined by 11.5% in volume, but increased by 2.2% in value terms year on year, totalling almost 9 500 tonnes worth JPY 5.3 billion (USD 54 million).

Outlook

During June and early July consumption of sashimi tuna is usually low in Japan except for fresh skipjack, which is used to make tataki or grilled tuna, a product that is in demand during summer. Demand for raw tuna is expected to pick up again once the temperature drops and school holidays begin in mid-July.

Demand for non-canned tuna in the US market is also forecast to be good this summer during the holiday season.

In the canned tuna market, prices are expected to remain high as the skipjack price is likely to strengthen further in the coming months. Some packers believe trends in major markets, particularly in the US and EU will improve during the second half of the year.