GLOBEFISH - Información y Análisis sobre el Comercio Mundial de Pescado

Volatile octopus prices and uncertainty in the squid industry

30/03/2020

Landings of octopus declined in the two most important producing countries (Morocco and Mauritania) in 2019. At the end of the year supplies became a little tight, while prices edged upwards after a continuous decline since late 2018. In the squid sector, Brexit may impact landings and trade in 2020 and beyond.

Octopus

During the first half of 2019, octopus landings in Morocco and Mauritania declined, mainly as a result of authorities being more restrictive in an effort to protect the resource. Last July, the European Union ratified a fishing agreement with Morocco that will allow a total of 138 vessels to fish within Moroccan waters. However, the agreement includes restrictions on the fishery. A similar agreement between the European Union and Mauritania is expected to be ratified soon. Supplies of octopus became tighter as Christmas approached. The Maya octopus fishery in Mexico ended on 15 December 2019, and landings dropped by 34 percent to just 25 000 tonnes compared to 2018.

The fishing season in Morocco did not start until the first week of January rather than in December as in previous years. These factors, combined with high demand before the Christmas season, put pressure on supplies, and prices increased. Both demand and consumption of octopus have grown in recent years. This is especially true for the United States of America, where octopus is now a regular item on seafood restaurant menus. This growth in demand has pushed up prices, which peaked in the summer of 2018. 

Trade

During the first nine months of 2019, Viet Nam’s exports of octopus to the United States of America skyrocketed. The export volume of Vietnamese octopus increased from 547 tonnes in 2018 to 1 246 tonnes in 2019 (+127.8 percent), while export value increased from USD 2.8 million to 6.7 million (+138.9 percent). This increased trade is seen as a result of the United States of America– China trade conflict.

The United States of America was forced to seek alternative suppliers, and this represented a golden opportunity for Viet Nam. In 2018, octopus prices reached record levels, with the largest sizes hitting EUR 17.00 – 17.50 per kg in August/September 2018. However, since then prices have dropped, and for the largest sizes they fell as low as EUR 10.00 per kg in October 2019. The price drop was partly caused by Spanish buyers holding back on purchases, as their inventories were quite high. However, in December prices went up again in line with Christmas demand in Spain.

Japan’s octopus imports, which declined from 2017 to 2018, showed signs of growth during the first nine months of 2019. Total octopus imports increased from 29 572 tonnes in the first nine months of 2018 to 31 315 tonnes during the same period in 2019 (+5.9 percent). The largest suppliers were Mauritania, China and Viet Nam, each shipping between 7 700 and 6 000 tonnes to Japan. Japanese imports of frozen small octopus declined from 28 874 tonnes in 2018 to 25 617 tonnes in 2019 (-11 percent). The largest supplier by far was Viet Nam, which accounted for about 80 percent (20 551 tonnes), followed by Thailand (3 628 tonnes), and Indonesia (515 tonnes). 

Octopus imports by the Republic of Korea continued their modest decline during the first nine months of 2019, falling from 52 117 tonnes to 50 960 tonnes. The two largest suppliers were China and Viet Nam, each accounting for about 40 percent of the total.

Squid

The first Falkland Islands (Malvinas) squid season of 2019 (February to May) closed with 51 000 tonnes landed, an increase of 10 000 tonnes compared to the first season of 2018. In contrast, the second season (August to October) was a disappointment with only 24 748 tonnes landed, a 31 percent decline from the same season in 2018. The 2019 season was closed early because of low catches. Naturally, the low catches pushed prices up. California’s coastal waters are under threat.

The water is acidifying twice as fast as the rest of the oceans, and this fast acidifying is having a very negative effect on various marine animals, such as crab, lobster and squid. California’s fisheries production account for about 10 percent of the total production of the United States of America.

In California, the Loligo squid fishery has been diminishing over the past few years. In 2017, the total volume landed stood at 137 million lbs (62 100 tonnes). In 2018, landings dropped to 73 million lbs (33 100 tonnes), and during the first eight months of 2019, only 7.1 million lbs (3 220 tonnes) were landed. The total catch limit for this season, which runs from 1 April 2019 to 31 March 2020, amounts to 236 million lbs (107 000 tonnes).Squid landings in the Canadian province of Newfoundland and Labrador were up by 40 percent during the first eight months of 2019, compared to the same period in 2018. 

Trade

Brexit is beginning to worry Spanish squid fishers. Spain risks losing half of its fishing income in the Falkland Islands (Malvinas). The Spanish squid fleet holds a near monopoly on squid fishing around the Falkland Islands (Malvinas). The fleet consists of 24 large freezer trawlers plus 19 vessels of British/Falkland Islands (Malvinas) owners, flying the island’s flag. But after Brexit, and until a fishing agreement is negotiated between the European Union and the United Kingdom, the Spanish fleet would not be able to operate in these waters. As much as 94 percent of the squid fished in the Falkland Islands (Malvinas) is actually exported from the port of Vigo in Spain, and one third of the Loligo consumed in Europe comes from this fishery.

At present, there is no customs fees on squid from the Falkland Islands (Malvinas) as both Spain and the United Kingdom are members of the European Union. If the United Kingdom is not able to secure a free trade agreement with the European Union by the end of 2020, supplies from this fishery could be subject to tariffs and trade would be hampered. Moreover, many jobs both in the Falkland Islands (Malvinas) and in Spain could be in danger. Japan’s imports of squid and cuttlefish fell by 3 percent during the first nine months of 2019, to 114 436 tonnes. The two largest suppliers, China and Peru, both increased shipments to Japan during this period. The trend has been spiralling down for some time, and although imports fell less in 2019 than in 2018, the trend is still down. 

China, on the other hand, increased its imports of squid and cuttlefish substantially during this period. Imports went from 179 030 tonnes during the first nine months of 2018 to 269 282 tonnes (+50 percent) during the same period in 2019. Peru and Argentina sent larger shipments (+93 percent and +100 percent, respectively), while Indonesia, the former major supplier, suffered a small reduction. While Spanish imports of squid and cuttlefish increased slightly in the first nine months of 2018, they fell back a little during the same period in 2019.

Total Spanish imports amounted to 217 160 tonnes during this period in 2019, with 28 percent coming from the Falkland Islands (Malvinas), 21 percent from Peru and 10 percent from China. American imports of squid and cuttlefish continued to decline in the first nine months of 2019, to 48 708 tonnes, down 14 percent compared to the same period in 2018. China was the largest supplier, accounting for about half of the total volume. 

Outlook

Demand for octopus continues to grow, but supplies are getting tighter, for several reasons. The two most important supplier countries, Morocco and Mauritania, are tightening regulations in an effort to protect the future of the species. With growing demand and limited supplies, one would expect prices to go up. But octopus prices reached a peak in 2018, and have been declining a bit since then, even though the Christmas 2019 trade saw a temporary rise in prices. At present, prices are volatile, and may stay that way for the medium term. Brexit looms over the squid industry and may bring important structural changes to the industry, both in fishing and trade. Uncertainty could also cause a supply shortage, which would push prices upwards in 2020. 

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