Economic crisis overshadows cod market

Prices of all groundfish species declined sharply in the first half of 2009. The main reason was lower demand by institutional clients. In addition, cheap cultured fish – pangasius and tilapia – create strong competition in the market. On the positive side, the return of cod stocks in the Barents Sea and in Newfoundland can be mentioned. In the latter area, it has taken almost 30 years for the cod stock to recover. Alaska pollack continues to be the main groundfish species caught worldwide. For this species, the situation is bleak in US waters, but higher quotas were given in the Russian fishing area. Supply to the market is expected to be abundant in coming months.

Cod stocks recover in Barents Sea 

In the Barents Sea, the overall cod biomass is now the largest it has been since 1968, and the spawning stock biomass is the highest it has been since the early 1950’s. The 2008 TAC in the Barents Sea was 430 000 tonnes. For 2009, the TAC is 525 000 tonnes. For 2010 and 2011, it will increase by another 50 000 tonnes each year. This means an additional 200 000 tonnes of cod available in the Barents Sea, between 2008 and 2011 to which another 30 000 tonnes in Iceland can be added. Furthermore, surges in cod have been reported in the Northwestern Atlantic and in parts of Western Greenland at a time when the market collapse for cod has bottomed out. This change in the abundance of cod is caused by environmental conditions that are making the North Atlantic a more hospitable habitat. It is interesting to note that only recently, cod was being red-flagged on various environmental lists, and there were demonstrations in the UK, against retailers who were selling thought to be ‘endangered’ cod.

Cod is back in Canada After almost 30 years cod is back in the Canadian Atlantic Ocean. However, this increase in production in this area has not yet had an impact on the present groundfish market, but it will most likely be felt in the coming years. The recovery of cod stocks in the Barents Sea and in the Northwest Atlantic were the subject of a presentation made at the Brussels Seafood Exhibition. It reported that cod stocks are at their highest levels in three decades. While the effect of possible increased catches is not apparent yet, it could impact the groundfish market significantly in coming years. Cod farming in Norway is experiencing an uncertain period as it battles to achieve profitability in the face of generally poor market conditions and difficulties in increasing cod growing rates sufficiently for economic production.

Higher imports into US market

Groundfish imports into the US market showed an increase (10% from 34 300 tonnes to 37 700 tonnes) in the first quarter of this year compared with the first three months of 2008 but have not yet recovered to January- March 2007 levels (43 900 tonnes). This rise reflects increased imports by the USA of both frozen fillets and blocks. During the first three months of 2009 the quantity of frozen groundfish fillets imported by the US was 24 400 tonnes, 10% more compared with the same period of the previous year, whereas imports of blocks went up by 9%.

China is the main supplier of both groundfish fillets and blocks to the USA with 82% and 74% respectively of total imports during January-March 2009. This country has increased its shipments to the US by 7% (fillets) and 5% (blocks) in the period under review. China is the major reprocessor of groundfish in the world, with strong imports of raw material from the USA, Russia and Norway. Prices of all groundfish on the US market have remained stable in the first half of 2009. The cod market, where prices had been in free fall since November 2008, seems to have stabilized at a low level. Fillets were quoted at USD 2.50/lb. Hake fillets, which followed the same trend as cod, had a value of USD 2.20/lb for the whole of this period. Only the Alaska pollack price declined in June 2009 from USD 2.00/lb to USD 1.93/lb, back to November 2008 levels.

Less cod on German market

German imports of frozen cod fillets have dropped by 26% in 2009 reaching 4 500 tonnes, mainly caused by the decline in Chinese exports (by 21% to 3 000 tonnes) but also by reduced shipments from Denmark and Russia.

During the first quarter of 2009, the UK imported 15 400 tonnes of frozen cod, the culmination of a downward trend, finishing almost 18% below the corresponding 2008 figure and 43% below the 2007. Again, the main reason for this decline is the drop in imports from China (-52% to 3 000 tonnes), the main supplier of cod to the UK market.

Outlook difficult

Wild cod should be in ample supply in coming months, and prices are expected to decline sharply during the remaining part of the year. Already at present cod prices were EUR 4.65/kg, which is the lowest level since three years.