FAO/GIEWS - Food Outlook No.4, September1998

FISH AND FISHERIES PRODUCTS

OVERVIEW

Preliminary estimates put world fish production in 1997 of 122 million tonnes virtually unchanged from the record level in 1996. A large increase in China, the world’s major fish producer, is expected to be mostly offset by a smaller catch in South America due to the adverse affects of the El Niño. The contribution of aquaculture, in general, to the world fish production continues to expand, but growth rates of shrimp culture are levelling off.

The value of international exports of fishery products increased slightly to an estimated US$56.5 billion in 1996 despite a reduced volume of trade, as prices were generally higher. In 1997, the developed countries accounted for about 85 percent of total fish imports in 1997 in terms of value. Japan was again the biggest importer of fishery products, accounting for some 30 percent of the global total. The United States, besides being the world's third major exporter

of fish and fishery products, was also the second biggest importer. The EC further increased its dependency on imports for its fish supply.

Shrimp continues to be the main fish commodity traded internationally with a 20 percent share of the fish and fish products market in value terms. During early 1998 the shrimp market has been affected largely by the Asian financial crisis. In Japan, normally a major importer, the weak yen and the overall difficult economic situation significantly reduced import demand for shrimp. Faced with weak prices on the Japanese market, the main exporting countries turned elsewhere to find outlets for their products. Although the European market was under-supplied in the first quarter of 1998 and prices remained high, the United States proved to be the most attractive alternative market for exporters. The country’s strong economic situation fuelled import demand and maintained high prices for several months. Farmed shrimp supplies are expected to increase in the coming months, as the aquaculture industry in most areas will come into full swing. However, coldwater shrimp supplies are forecast to be slightly below last year’s levels. Prices of tropical shrimp are expected to decline further, as the Japanese market is unlikely to pick up in the near future.

During early 1998 the Japanese shrimp market continued to be affected by the country’s difficult economic situation. Consumer demand was greatly reduced and as a result imports decreased. Importers bought small amounts of shrimp in the first half of the year in expectation of some price declines in the course of the summer months. Product movements are extremely slow and reprocessors and institutional users are taking a "wait and see" attitude as demand from final consumers remains poor.

WORLD FISH PRODUCTION

SOURCE: FAO

By contrast, the shrimp market in the United States remains very attractive for exporters, with high prices and a strong demand for every type of shrimp. In the first quarter of 1998, imports into the United States reached a record of 67 200 tonnes which is 20 percent more than in the same period of 1997 and consumption reached 75 000 tonnes, the highest level since 1993. Virtually all major shrimp exporting countries supplying the United States reported increased exports, with the two main exporting countries, Thailand (+23 percent) and Ecuador (+34 percent) reporting the biggest increases. The United States economic situation is expected to continue to fuel strong demand for shrimp in the remainder of the year and record consumption is now forecast for 1998. Since June , shrimp prices in the United States have started to weaken somewhat from the peak levels reached earlier in the year. Large-sized shrimp prices are still US$1 per kilogramme more than a year ago, but are expected to fall soon. Medium-sized black tiger prices are have already slipped back to the levels of mid-1997. These price declines were caused by the difficult market situation in Japan and by the expectation of large supplies in the coming months.

With regard to the European shrimp market, the opening months of the year were characterized by strong price increases. In recent weeks, however, prices have weakened and traders are expecting lower prices in the coming months. As for the United States market, the main reason for the decrease in prices is the depressed Japanese market, combined with higher production expected in the main shrimp producing areas.

The current dull situation on the Japanese shrimp market is expected to persist in the coming months. Improved supplies in Asian countries might cause a weakening in the prices for black tiger shrimp in general, and lower prices are also foreseen for other markets, such as Europe and the United States.

Tuna is the second largest traded fish commodity accounting for some 11 percent of international trade in fish and fish products. Improved skipjack catches in the second quarter of this year have led to weakening prices on the world market. The price for skipjack in Bangkok has fallen to about US$1 050 per tonne, from US$1 200 tonne earlier this year. The supply of skipjack on the market is expected to stay high and further price reductions are likely. Yellowfin catches remain low, but prices fell somewhat towards the middle of the year, due to a strong sales campaign by Mexican companies. The tuna catch in 1998 is expected to exceed the reduced 1997 level.

Skipjack catches were relatively good in the second quarter of 1998, while the share of big yellowfin in total catch decreased. As of June, the reported share of large yellowfin in the Indian Ocean catch was as low as 10 percent, causing shortages of supply. Demand for yellowfin is particularly strong from European canneries, especially in Italy. French vessels stopped selling in June, due to an overall shortage. The Western Pacific is no longer able to supply good quantities of yellowfin, as the share of this species in the overall landings has declined to 8-9 percent. By contrast, Mexico is making a comeback as a supplier of large yellowfin to Europe, as are the Republic of Korea and Taiwan Province of China. As of June, Mexican yellowfin was selling at US$1 750 tonne, similar to the level in mid-1997.

Recently the fresh tuna market in Japan has been very weak due to large supplies of fresh bluefin from Japan and Taiwan Province of China. Market activity is normally sluggish in the hot summer months of June and July. Like other imported fishery products, the tuna market has also been affected by the general economic conditions of the country.

Canned tuna sales in the United States are stable, but are expected to weaken in October, a normal seasonal feature. Up to 8 June, 61 800 tonnes of canned tuna were imported into the United States, 8 percent more than the same period last year. The 1998 tariff quota was thus exceeded by 100 percent. Thailand continues to be the main exporting country to the United States market with 19 400 tonnes in the first quarter of 1998. The Philippines reported very high canned tuna exports to the United States market with 13 800 tonnes during the January-March period, followed by Indonesia with 5 000 tonnes. Prices of canned tuna have increased in the United States to reach US$22 per carton (48x6oz cans), which is US$1 per carton more than the price a year ago. The present decline in raw material prices might lead to lower canned tuna prices on the United States market in the coming months.

After several years of problems and setbacks - closure of major canneries - the Thai canned tuna industry has recovered. Exports to the United States, traditionally the largest market, are almost back to normal, and new non-traditional markets such as Egypt, Argentina and Saudi Arabia have been opened up.

Yellowfin catches were disappointing in almost all areas in the opening months of the year. Nevertheless, the yellowfin market seems to be at a turning point, as some supplies are arriving now from the Eastern Pacific and it is expected that yellowfin prices paid by canneries in Europe will slowly come down from the present high level of US$2 000 per tonne (origin Indian Ocean). The El Niño effect led to low tuna catches in South America and tuna loin factories had to import raw material for shipping to Europe. The effect of El Niño on tuna fisheries is expected to lessen soon and a normalization of the market is expected in the coming months.

Although tuna catches in the Western Pacific have picked up slightly, those in the Atlantic and Indian Oceans are still poor. Canned tuna prices are expected to stay at their present high level, but some downward movement is likely after October, when demand slows down.

Groundfish account for about 10 percent of world trade in fish and fish products. Several of the most important species have been faced with poor resource management in the past and supplies from these fisheries are decreasing. As a result of low groundfish supply, prices on all levels have increased and demand for alternative seafood products has strengthened. In several of the Asian countries, the economic crisis has encouraged consumer to shift to lower-priced products.

The total Argentine catch of Argentine hake in 1997 reached almost 600 000 tonnes, more than 60 percent above the quota for the third consecutive year. Because of heavy fishing pressure, Uruguay and Argentina are also experiencing problems within their Common Fishery Zone. The Argentine authorities seem to enforce different technical measures to protect the hake resources. This includes closing of fishing areas and stronger restrictions especially for the factory trawlers as well as tougher catch limits within the shrimp fisheries. It is yet to be seen whether these measures are enough to keep the total catches within the quota limit.

Due to the El Niño phenomenon, hake was virtually absent in Peruvian waters in the latter part of 1997 and the beginning of this year. At the same time there were also considerable problems due to high catches of hake juveniles, and as a consequence several areas were closed. However, as the El Niño has started to ease, the catches are returning to normal.

Because of the lack of an agreement between Norway and the Russian Federation in regard to allowing Norwegian research vessels into the Russian EEZ, the scientific data concerning the cod stock situation are incomplete. As a consequence, the cod stock situation in the Barents Sea is quite uncertain. Although, due to high fishing pressure, increased cannibalism and poor individual growth, there is no doubt that the cod stock has declined quite dramatically the past few years.

New Zealand hoki exporters are experiencing strong demand for their block products which can substitute for other whitefish species in short supply. The market prices have improved, and New Zealand exporters gain from the weaker New Zealand dollar.

Prices on the world market are likely to stay relatively high also in the long term. A further reduction in the availability of Alaska pollock is expected, although somewhat less than initially forecast. In addition the cod resource in the Barents Sea is under severe pressure and lower supply from this area is likely. Also, the Argentine hake resource is over-exploited, and less hake is expected on the market.

Cephalopods account for some 4 percent of international trade in fish and fish products. Japan is the world’s major market for cephalopods. As for shrimp, the difficult economic situation in this country has had a strong impact on price levels of cephalopods worldwide. Weak demand for octopus caused a downturn of prices that has rendered fishing for octopus mostly uneconomical. A similar situation is reported for cuttlefish. European traders are likely to benefit from these developments, as the weakness of the Japanese market will make more cephalopods available for the European market. By contrast to other cephalopods, Illex prices are going up, as last year’s over-supply has now been absorbed by the market and the 1998 catch has so far been only two thirds of the 1997 level.

Octopus prices in Las Palmas are falling, as the demand by Japanese buyers is extremely weak reflecting the difficult economic situation there. The main reasons for this are that octopus prices had reached exceptionally high levels in 1997, which discouraged consumers. Since the beginning of May, the price of large octopus (2.0-2.3 kg) in Japan has fallen from US$7 per kilogramme to less than US$5 per kilogramme but nevertheless demand remains very weak.

In the first five months of 1998 - practically the full fishing season - Illex catches were 85 000 tonnes, compared to 140 000 tonnes in the same period of 1997. This disappointing catch was caused by very low production in May, normally a peak production month. As a result, the squid market in Japan and Europe is likely to normalize in the coming months, and prices are expected to recover to usual levels from the lows in 1997. By contrast, loligo catches were better in 1998 than in previous years. In the first five months of the year, some 32 800 tonnes were caught in the Falkland Islands/Malvinas area, double the corresponding 1997 figure. This should lead to better supply to the European market; Italian traders and processors in particular will benefit from the improved supply situation.

Supply of all main cephalopod species is expected to be very limited in the closing months of the year. Octopus catches will be well behind the 1997 figure, but prices are expected to drop even further. The Southwest Atlantic Illex fisheries is practically over and the catch is about 40 percent short of the 1997 output. Prices are expected to rise further but the bleak situation on the Japanese market will limit the increase. Catches of cuttlefish will also be limited, but a bigger supply will reach the European market, where prices compare favourably with those offered by Japanese buyers.