Overview of key markets for fish products from Russian and American Pacific fisheries as per first week of February 2011

February 18, 2011 15:25

In the beginning of February 2011 the general situation on the Russian and US grounds of pollock has so far remained fairly contradictive with a slowdown of catch and production rates (which were rather high in the first week of the month) on the Russian grounds in the Sea of Okhotsk and a dramatic rise of activity on the US grounds without any signs of declining catch rates appearing by the middle of the month, according to the overview prepared by analysts of http://www.megafishnet.com/ based on Japanese, Russian and American sources.

On the second week of February 2011 the catch rates on Russia's Okhotsk grounds grew much slower especially in the North Okhotsk subarea, where the weekly harvest went practically three times down to less than 10,000 tonnes. Main operations were concentrated in the Kamchatka Kurile and West Kamchatka subareas, however due to more difficult weather conditions as compared to the first week of February 2011 the pollock harvest through the second week of the month went down practically by one fourth to less than 55,000 tonnes. As a result, the roe yield through the week declined to less than 2000 tonnes, the weekly production of fillets failed to reach 3000 tonnes and the output of H&G pollock through the week under analysis was well below 25,000 tonnes.

The seasonal harvest of pollock on the Russian grounds by mid-February 2011 reached 300,000 tonnes, while the output of frozen pollock roe was close to 10,000 tonnes with products made in January and first half of February already reported as high quality.

As for the US products, the Japanese importers also reported that in the beginning of February 201 quality results were already fairly high, but the dominating product was in small and medium-size sacks as the fishermen were mostly harvesting five-year-old pollock of 550-600g on the average. In early February 2011 the spawning pollock fishery in the east of the Bering Sea was progressing much faster thanks to increased efforts with newly coming factory trawlers and fishing vessels who abstained from active participation in the pollock fishery in the first week of the A season due to various reasons (unlike longline and trap fishery the trawl fishery was officially opened on 29 January 2011).

The pollock catch in Alaska through the second week of February 2011 approximated the level of 50,000 tonnes, while in January 2011 it was well below 30,000 tonnes. According to the estimates of the Japanese importers, if the weekly catches in the coming weeks stabilize at 50,000 tonnes, capture quotas for the A season will be completely covered in early April 2011 at the latest, despite almost 1.5-fold increase of quotas on last year (namely by 172,000 tonnes to 540,000 tonnes, including the Gulf of Alaska and Aleut Islands).

Already in the first week of February 2011 the pollock fishery was conducted by practically a full group of 3 motherships, 14 factory trawlers and 44 fishing trawlers landing catches to onshore factories. High level of the fishery activity and high probability of full and early exhaustion of seasonal quotas could be proved by at least a tripled harvest in Alaska. The total volume of the seasonal harvest as per 5 February 2011 rose nearly 150% on last year and amounted to ca.82,000 tonnes. All the fleet's operations were concentrated in the Bering Sea because catches in the Gulf of Alaska fell more than 10-fold on last year and failed to reach even 500 tonnes.

However, with the A season normally focusing mostly on pollock roe, the market specialists could not neglect the fact that the roe yield on the US grounds in the Bering Sea remained very low in the beginning of February 2011. The average result for the first two weeks of the new season was limited to only 2.30% and even in early-February 2011 it did not reach 2.50%. Just like in 2010 the roe recovery rate remained low until the end of the first week of February 2011, but already as of the second week of the month it jumped to 4.00% and did not go down. For comparison, the A season 2010 finished with the roe yield of nearly 4.20%. In the current year 2011 provisional estimates did not provide for such high roe yield as the general condition of the pollock stock showed its continuously declining abundance of mature and large pollock.

Catch and production of pollock commodities in USA as per 5 February 2011

 

30.01.11 -05.02.11

+/- versus 2010

Total (metric tons)

+/- versus 2010

Catch

48,892

280.3%

81,958

243.2%

Commodity production

Roe

1,172

279.7%

1,886

280.7%

Fillets

7,174

403.7%

10,933

316.7%

Headed

2,232

262.9%

3,112

212.3%

Mince

1,271

235.8%

2,285

200.6%

Surimi

5,972

488.3%

8,566

420.5%

Fishmeal

2,226

643.4%

3,022

597.2%

Note: 1 - catch data do not cover pollock bycatch; 2 - according to the National Marine Fisheries Service of the USA.

The first week of February 2011 showed that, with all attempts of factory trawlers to find concentrations of large pollock for the sake of raising efficiency of fillet production, five-year-old pollock could dominate in the total seasonal catch and the total roe content in the A season could turn out to be below 3.50% and seasonal roe production could fail to reach even 19,000 tonnes (even in case of complete exhaustion of the 540,000-tonne quota). However, in that case the rise of roe output on the US grounds in the A season would be very big at 30-35% as last year it was limited to less than 14,500 tonnes. By the middle of the first decade of February 2011 the output of frozen pollock roe in Alaska was close to 2000 tonnes, nearly three times up on last year (while production of frozen cod roe went down nearly by 15% to 700 tonnes with longline fishery developing extremely slowly).

Headed pollock and minced pollock production jumped approximately twice, while the output of pollock surimi rose more than four times to 8,500 tonnes. The output of pollock fillets (all types) went up more than three times to nearly 11,000 tonnes, while fishmeal production on the pollock grounds jumped most substantially, practically six times namely, to 3000 tonnes.

Market specialists noticed that a quick boost of surimi production could be partly attributed to active rise of fillet output under European customers' orders, as the fishermen harvesting medium-size and large pollock produced fairly large volumes of low grade surimi mince from trimmings and wastes. A large rise of fillet production was quite expected as quotas were increased greatly and talks on price conditions for sales to the European market finished quickly and fairly successfully for the US producers (prices were reported at 3.60 USD per kilo of block-frozen boneless and skinned fillets and 4.20 USD per kilo of deep-skinned fillets). The current decline of prices hardly touched longterm contract prices often agreed for the period of 12 months. Faster growth of fishmeal production could be explained by strong market situation which continued strengthening. More specifically, in January 2011 CAF prices for fodder fishmeal imported to China were reported at 1300-1400 USD per tonne and in mid-February 2011 they reached 1350-1500 USD per tonne and sometimes even 1800 USD per tonne.

The price situation on the market of H&G pollock remained fairly weak and the product prices still ranged at 1250-1300 USD per tonne CAF China. However, some market specialists recalled US experience of sales to the Japanese pollock surimi market and would rather attribute the weak prices to extremely strong dependence of the Russian producers on sales to China. They said that in a current situation on the world food market such a low level of prices for such universal raw material as pollock was completely inappropriate even taking into account increased US quotas.

Diversification of sales could become one of the ways-out with African markets attracting more and more interest, though there would be definite difficulties including the need to return to carton boxes. Still, theoretically sales of Chinese fillets to the markets of both Americas, where the requirements for products made from the Russian raw material are not as strict as in Europe, could go considerably up thus encouraging a quick decrease of coldstore inventories with the Chinese processors (the latter development expected to rise their procurement activity).

Pollock roe

US sales of frozen pollock roe from the A season in the current year could start only from mid-March 2011. The Japanese professional sources speculated that some onboard producers had announced their plans to conduct first seasonal auctions in Seattle in the second decade of March 2011. More specifically, the Japanese importers said that they had already received invitations for participation in auctions in Seattle from 15 to 18 March 2011. Such invitations were sent mostly by members of Surimi Producers Association uniting most of factory trawlers' managing companies. In the meantime, one of US largest producers Trident Seafoods allegedly decided to conduct the first round of auctions in Seattle on the first week of March 2011.

When defining the time period for the first round of auctions for US pollock roe the organizers will most probably try to avoid concurrency of the auctions with one of the largest fish fairs in Boston to take place on 20-22 March 2011. At the same time, some market specialists are sure that serious differences in opinions of the US producers as to the starting time of the first auction sales this year can directly root from actions of the Russian producers and last year sales as well.

Due to very small quotas (less than 370,000 tonnes for the A season and 315,000 tonnes for the Bering Sea operations) and extremely poor age structure in 2010 the US producers failed to maintain the seasonal production of frozen pollock roe even at 15,000 tonnes, but at the same time they had to accept the fact that the quality of their products was unusually low and the average prices for two spring auctions leveled at slightly more than 600 Yen per kilo (much lower than 7.00 USD even at the exchange rate of 90 Yen per USD). At the same time, the Russian producers succeeded in raising the output of frozen pollock roe to more than 30,000 tonnes with the product quality at least not declining. As a result of the Russian success and US problems, prices for the Russian products at spring and summer auctions ranged at 8.00-9.00 USD per kilo, the highest prices observed for direct shipments to the Japanese market the share of which approximated 80% of the total volume of the Russian pollock roe sales.

In the current year 2011 leading US producers will try to take the initiative in price formation and get back the main attention of foreign buyers, the Japanese first of all. Actually, their attempts have grounds such as the quota increase nearly to 500,000 tonnes of the Bering Sea pollock and potential recovery of product quality thanks to the current age structure of the stock. At the same time, such plans may collide with organized activities of the Russian producers who are again going to start active sales of their products in Pusan earlier than their American colleagues.

Some market specialists think that if the Russian side somehow succeeds in raising the product quality as compared to the first March auctions of last year, it may rely on fairly strong prices, with some reckonings also taking into account the positions of the South Korean buyers. In the meantime, the Russian side can start active sales without usual accumulation of the product volumes. Such position can turn out to be very convenient for many South Korean and even Japanese buyers, as the current financial situation in Japan leaves much to be desired and even a very strong exchange of Yen often fails to save the situation.

For the first round of seasonal auctions in Pusan the position of the South Korean buyers might grow of key importance because lots of January and even partly February products could be dominated mostly by immature roe. The demand for such roe from the Japanese market is normally extremely low, but for the South Korean buyers such products could be especially attractive as they would enable simultaneous production of ready-to-eat products both for the South Korean market and for the Japanese market (out of that part of the lot which complies with the Japanese requirements). The South Korean producers considerably increased volumes of their sales of processed and ready-to-eat pollock roe to the Japanese market last year (+15% to nearly 2000 tonnes), while import of the Russian raw material decreased by ca.10%. The latter development actually fed the Russian hopes for better activity of the South Korean buyers on the Russian market of the raw material in the current year, especially if the exchange rate of won was fairly stable and strong.

Results of the first Russian sales which took place in the end of the first decade of February 2011 proved the possibility of the above mentioned development of the market situation. Though the supply was very limited (less than 100 tonnes for two producers), the auctions still highlighted some important moments.

First of all, the auctions' organizers managed to attract more than 30 buyers, including some 10 Japanese companies, thus showing comparably high market activity.

Second, the South Korean buyers who played leading parts at the first Russian auctions offered rather high prices for the lots containing 90% of non-graded roe. More specifically, buyers were surprised to see that there were practically no offers at low prices and as a result prices settled at 5.00-6.00 USD per kilo (5.40-5.60 USD per kilo on the average). That was in keeping or slightly below the results for the first March round of auctions of Russian products in 2010. In the meantime, many traders forecasted February sales of autumn products at prices of no more than 3.50 USD per kilo and the average prices at 4.00-4.50 USD per kilo.

Prices for high grade roe, the share of which in the total volume put up for sale at auctions was very small, amounted to 10.00 USD per kilo, the result reported as quite high for the current condition of the Japanese market of ready-to-eat pollock roe. However, the negative estimates of the market situation could be not true to life as the turn-of-the-year inventories of processed pollock roe in Japan appeared to be at least 10% smaller than last year, while the import volume of frozen raw material and processed products grew by more than 10% in 2010.

Pollock fillets

In the beginning of February 2011 the market players reported about a noticeable decline of prices on the US market from stable and high level in previous months. The decline actually had a preventive character, because in late January and even first half of February any large shipments of products from the new season in Alaska could not simply be. Some specialists said that the price decline was made specially to avoid a dramatic fall at the start of main seasonal shipments, but some analysts feared that such measure would hardly bring any fruits and in spring prices would descend even more.

The price decrease had so far touched mostly Alaskan products, while prices for imported products changed not very greatly. Should the trend persist, the price levels would grow closer to each other which exactly was taken as a key condition for the Alaskan products to get additional demand sources, the development growing extremely urgent with the production rise by more than 50%.

Auctions which took place at Boston Fish Exchange in early February 2011 showed a 6-7% decline of prices for skinned boneless pollock fillets block frozen from Alaska as compared to the closing week of January 2011. More specifically, prices for the product descended to 1.60-1.64 USD per pound from the level of 1.72-1.75 USD stably observed within more than 12 months. Last time, the price decrease for national products was registered in January 2010 when too high price level of 2009 was finally adjusted.

For the first time in recent years prices for deep skinned fillets also declined by the same 7% to 1.90-1.95 USD per pound from such high level of 2.00 USD per pound (more than 4.40 USD per kilo) observed for too long period of time.

Thus, by mid-February 2011 prices for Alaskan products on the US market descended to 3.55-3.60 USD per kilo of skinned boneless fillets and 4.20-4.30 USD per kilo of deep skinned fillets. However, prices for imported products, mostly skinned boneless Russian pollock fillet blocks double-frozen in China, went down by only 2.0-2.5% in the beginning of February 2011 and still remained at 1.30-1.35 USD per pound or 2.85-3.00 USD per kilo.

At the same time, market players underlined that in 2010 there was also a fairly serious time break between the price declines for the Alaskan and Chinese products, with the Chinese fillets depreciating only in March. In 2011 the situation will probably repeat itself.

The biggest decline, by 10% namely, was observed for pollock mince, though the production data in Alaska showed that the seasonal output could rise not as much as for other commodities. More specifically, prices for pollock mince dramatically declined from 1.00 USD per pound (2.20 USD per kilo) in mid-2010 to 0.90-0.95 USD per pound or 2.00-2.10 USD per kilo.

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