Overview of key markets for fish products from Russian and American Pacific fisheries as per mid-December 2010
More specifically, in the year 2011 the US fishermen will be able to harvest 1.252 million metric tons of Bering Sea pollock. Along with the above TAC, the fleets will also be allowed to harvest 19,000 tonnes in the Aleut Islands where the quotas have continuously remained uncovered. In particular, in the year 2010 only about 1300 tonnes were covered in the area out of the same quota volume.
The above mentioned one and a quarter million tonnes does not include allowable catches in the Gulf of Alaska which approximate the Russian quotas in the waters of East Sakhalin.
Thus, unlike fairly skeptical estimates which have been widely spread among market experts pollock quotas 2011 for commercial US fishermen have been increased as compared to the current year nearly by 55% or practically by 440,000 tonnes. Skeptics have immediately doubted the actual possibility of complete exhaustion of such strongly increased quotas, especially in the winter-spring A season, when big water areas in the east of the Bering Sea to the north of the Pribylova Islands get closed with ice fields.
One and a half times bigger US quotas of Bering Sea pollock have created apparent prospects of dramatic expansion of commodity product supply, first of all surimi, fillets and roe, and there could not but come quite reasonable concerns of market stability. Some Russian fishermen think that even such a strong increase of US capture quotas will not directly influence on prices of frozen H&G pollock of the Russian origin. At the same time, sales of frozen Okhotsk pollock roe may hampered by the development because its production is forecasted to remain in keeping with the current year level (more than 30,000 tonnes judging by import statistics for Japan, South Korea and China), while Alaska production in A season only may dramatically return to the level of 20,000 tonnes. It all together will lead to a strong rise of frozen raw material supply for main markets and, first of all, for the Japanese market. Thus, there are all the conditions for a price fall for frozen roe making a very important contribution to proceeds both of the Russian and US pollock fishermen.
In the year 2012 the biologically allowable pollock catch has been preliminarily raised to 1.6 million metric tons. Nevertheless, a strong increase of catch quotas will not be observed evidently, because the maximum level of capture of all regulated bottomfish species in the next several years will not be changed and remain at 2 million tonnes. Such a big increase of pollock quotas and evidently cod quotas (US Bering cod TAC 2011 amounts to ca.228,000 tonnes, ca.45% up on the actual harvest in 2010 failing to reach even 160,000 tonnes and 35% up on the TAC 2010) results into the same big worsening of the situation with quota regulation of a number of other important species for the US operations, including plaice, halibuts, ocean perch and Atka mackerel. A kind of compensation can be given by quotas of several species which still have weak economic prospects, for instance, Arrowtooth halibut, but that will be not enough to cover the negative impact of the strong rise of pollock and cod quotas onto some other species.
Thus, the US legislation has not yet allowed increasing pollock quotas unlimitedly. That gives an evident advantage for the Russian fishermen who at the same time will have to admit that in the coming several years they will hardly win position of bigger suppliers of pollock products onto the world market as compared to Alaskan fishermen. Effects of the above market developments look quite transparent, especially taking into account the fact that the economies of the USA, EU and Japan after the world crisis have been rising very slowing thus naturally limiting the demand from these major markets. Nevertheless, market specialists think that Russian products still have good chances to maintain reasonable sales conditions, one and most important of which is MSC certification as eco-problems have been gaining popularity among users and consumers on highly developed markets. Therefore, sales focus on eco-motivated demand normally brings very good fruits. Besides, priority rates of Russian economy and increase of solvent demand will probably enable Russian pollock producers to focus mostly on domestic sales which will push considerably down urgency of Russia-USA competition on export markets.
Increase of Bering Sea pollock TAC 2011 for US fishermen to 1.25 million tonnes will result to a more than 50% rise of capture quotas of roe pollock in A season (to 480,000 tonnes, nearly 170,000 tonnes up on 13,100 tonnes for A season 2010). Another 1000 tonnes were harvested in the Gulf of Alaska with the total A season production 2010 amounting to ca.14,150 tonnes.
As compared to last year, pollock roe production in A season in the Bering Sea went down by 12%, though due to a nearly double rise of production in the Gulf of Alaska the total output declined by ca.8%. Japanese market specialists think that general decline of frozen pollock roe production in Alaska in the main season for the product has also come as a result of a decrease of actual catches on the Bering Sea grounds nearly by 2000 tonnes and problems with size and age structure of pollock catches. The thing is that year 2000 pollock class has been changed by the class of 2006, though due to its age the stock has been so far unable to give stable roe content.
In the coming year 2011 the pollock class 2006 will be five year old and that can lead to higher quality of US supply at spring auctions in Seattle as the roe content in big and very big sacks will evidently be not very high and the share of roe in small sacks (the product enjoying more active demand from the Japanese users) will considerably increase.
At the same time, forecasters speak about a further decline of the roe yield which in the A season in the Bering Sea amounted to less than 4.20% versus nearly 4.75% one year earlier. If such forecasts come true, due to the roe yield decline seasonal production of Bering pollock roe in Alaska in 2011 may fail to reach 20,000 tonnes and will be probably limited to 19,000 tonnes and even lower. However, in this case the total production volume in the A season and correspondingly the spring supply will most likely reach 20,000 thanks to rising roe output in the Gulf of Alaska.
US export of frozen pollock roe to Japan and South Korea in 2009-2010
Yen per kilo
USD per kilo
Note: 1 - average CIF import prices; 2 - Japanese import may be partly represented by cod and congener species roe; 3 - according to official customs statistics of respective countries.
Serious problems with quality of Alaskan products from the A season 2010 should have had an impact on the US export of frozen pollock roe, but they have not adequately influenced the export prices. More specifically, as per late October 2010 the average export price FAS or ex-transport amounted to nearly 9.50 USD per kilo, 5% up on 2009, while at spring auctions in Seattle the price level declined by more than 35% on last year to more than 600 Yen per kilo only (thus failing to reach even 7 USD per kilo and amounting to ca.6.50 USD per kilo due to weaker Yen to USD exchange rate as compared to December 2010). At autumn auctions in Seattle where traders offered products from the summer-autumn season B, the average price level failed to reach even 400 Yen per kilo, or below 5.00 USD per kilo. Thus, the official export figures actually do not correspond with the real sales prices of US products, though they can still turn more or less true if Japan purchased only high quality US products either directly or via South Korea.
In October 2010 the average price of US exports to Japan amounted to slightly more than 6.15 USD per kilo, while indications for shipments to South Korea amounted to ca.7.75 USD per kilo. In the meantime, at October auctions in Seattle prices for product lots with quality approximately corresponding that of the quality of A season products of high and medium grades ranged from 420 to 710 Yen per kilo, or from 5.05 USD per kilo to 8.50 USD per kilo.
On the other hand, the average price of the Japanese import after a dramatic rise in September 2010 to the level of 1050 Yen per kilo in October 2010 also dramatically descended to the level of 750 Yen per kilo (ca.9.00 USD per kilo according to the average exchange rate for October), more than 10% down on last year. In general through the first ten months of the year it amounted to ca.670 Yen per kilo, more than 30% down on last year. At the same time, judging by the official US export figures, prices for direct shipments from the USA to Japan in the current year declined by less than 3% to at least 8.00 USD per kilo on the average, while prices for shipments to South Korea most of which were re-exported to Japan rose nearly by 9% and leveled at 11.00 USD per kilo.
Some market specialists think that export volumes mostly reflect actual situation with export of frozen pollock roe export from the USA which has been serious hit both by production decline and price reduction. Presumably, the dramatic decline of officially registered export volumes has been definitely connected with the above developments.
Total shipments through October 2010 were officially registered at only 300 tonnes of frozen pollock roe, one third down on the export volume in October 2009, though autumn auctions were conducted much earlier than usually. In general, through the first ten months of the year the export volume was limited to less than 11,200 tonnes, 29% down on the respective result of last year. Thus, export declined by more than 4500 tonnes, while the total production volume in A and B seasons declined by only 2000 tonnes or 11%.
As per the end of October 2010 US export to Japan was 26% or 4500 tonnes down on last year and amounted to 12,700 tonnes (cod roe could have been partly imported under the same customs code as pollock roe, because, unlike the South Korean statistics, the Japanese import statistics does not strictly differentiate between them). The South Korean purchases of US products rose by only 1000 tonnes or 8% and amounted to only ca.1300 tonnes.
For understanding the actual situation on the frozen pollock roe market it is important to know what is going on with sales of processed and ready-to-eat products, especially on the world's largest Japanese market (despite rising position of the South Korean market). In this connection the level of coldstore inventories is of great importance, though declining inventories not always mean that sales and consumption develop actively and producers may count on strengthening of market structure.
In October 2010 dynamics of coldstore inventories of processed pollock roe in Japan was briskerthan last year, though only thanks to new inventories rising by more than 15% on October 2009 to ca.3750 tonnes. At the same time, shipments from main coldstores remained actually in keeping with last year and amounted to ca.4300 tonnes. For the first time since the beginning of the year results of new supplies and landings ere wither on the last year level or higher than last year. Market specialists think that theoretically it can be taken as a sign of a general increase of the market activity, however after the price decline from the end of the first half of the year 2010 producers should have hoped for a more serious improvement of the situation.
Total coldstore inventories of processed products by early November 2010 was estimated at ca.20,500 tonnes, 12% (2800 tonnes) down on last year. Subject to normal market situation such decline of inventories would have given grounds for hopes of market strengthening and price rises, however in the middle of December 2010 producers hoped to see purchase prices of frozen raw material declining, which would even more decrease their final products for ready-to-eat products in order to push up the demand. Probably, such hopes will come true if the total volume of supply of frozen pollock roe 2011 of the Russian and US origin reaches the level of 50,000 tonnes.
Larger pollock quotas and catches on the US Bering Sea grounds (+50%) can be accompanied by even more serious rise of production volume of pollock fillets, as the rise of the medium-size pollock of the 2006 class to 600-700g provides for good conditions for more active use of the raw material for fillet production than in summer-autumn fishing period of the current year 2010. Some forecasters say that a considerable rise of production of pollock fillets in Alaska in combination with stably strong shipments of H&G pollock of the Russian origin for processing in China in 2011 may lead to a serious decrease of prices for pollock fillets on the world market. Most probably, prices for Alaskan products may also fall under the influence of that trend, however in the second half of the current year 2010, at least, by November current, official results of US exports remained fairly high.
In September 2010 the average export price amounted to 3.25 USD per kilo, more than 7% up on last year, such a strong result was observed in a situation of very high activity of shipments. Presumably, in this connection, September 2010 showed peaking exports of products from the season B, the product's main season. Total shipments to all directions through the month amounted to ca.11,350 tonnes, while in the previous eight months the average monthly volume of shipments amounted to less than 7700 tonnes. As compared to last year, September export practically doubled and as a result by the end of the third quarter of the year the total volume of the US export of pollock fillets approximated the level of 73,000 tonnes, 12% up on last year.
In October 2010 activity of shipments went dramatically down, just like prices, but not so strongly as to speak about a big fall of prices. The volume of October export amounted to nearly 4500 tonnes, 60% fown on September 2010 and more than twice down on October 2009. The average export price declined by 6% on September 2010 and ca.4.5% down on October 2009, but it settled at the level of 3.00 USD per kilo (namely slightly higher 3.05 USD per kilo), and the average price since the beginning of the year as per late October 2010 leveled at 3.20 USD per kilo, ca.2.5% up on last year.
At the same time, shipments to Germany grew nearly by 23.5% to about 34,000 tonnes or nearly 45% of the total export (as per late October 2010 traders exported ca.77,150 tonnes, 4% up on last year), while prices remained practically unchanged at ca.3.60 USD per kilo. As for shipments to the Netherlands which are basic for further sales of Alaskan products to the EU markets, the price level declined by only 3% to ca.3.40 USD per kilo, but the shipments' volumes rose by 8% to 17,000 tonnes (in October 2010 the average export price for the Netherlands sank to less than 1.80 USD per kilo, but the export volume amounted to only 140 tonnes and the October result did not influence the total result since January 2010 greatly). There was a dramatic rise of prices for direct shipments to the UK, the average export price for that direction turned out to be 60% higher than last year and amounted to nearly 3.70 USD per kilo, and in October 2010 it was close to 4.00 USD per kilo versus 3.30 USD per kilo last year.
Out of main European directions the price level noticeably decreased only for shipments to France, moreover it happened against the background of a considerable decline of shipments. Since January 2010 shipments totaled only slightly in excess of 3000 tonnes, nearly 35% down on the respective result of 2009. The average export price declined by 13% to 2.50 USD per kilo.
USD per kilo
USD per kilo
Note. 1 - FAS prices (ex-vessel); 2 - according to US National Marine Fisheries Service.
As for shipments to China, the price level was approximately the same, but it nearly unchanged as compared to last year, though in September and October 2010 prices were much lower than last year (correspondingly by 11% and 3%). The volume of the US export of frozen pollock fillets to China went down by ca.20% or 3000 tonnes as per late October 2010 and amounted to ca.11,500 tonnes. Direct shipments to Japan came down by one third to 700 tonnes, though they were developing very briskly in October 2010 when they shipped more than 550 tonnes at prices of 2.40 USD per kilo.
At the same time, shipments to South Korea mostly used as a terminal station for further sales on other Asian markets rose by 165% to nearly 7000 tonnes (though in October 2010 shipments were not registered at all, and in September 2010 they sent only one container), with the price level rising nearly by 20% to ca.2.50 USD per kilo. Thus, the total volume of the US export of pollock fillets to East Asian markets, including Thailand and Malaysia, amounted to nearly 19,500 tonnes as per late October 2010, ca.1500 tonnes down on last year, as shipments to Thailand and Malaysia declined by ca.2300 tonnes while shipments to Pacific countries even slightly increased.
Export growth against the background of declining production volumes (shipments from the season B decreased nearly by 2% to ca.68,500 tonnes) and fairly high prices proves that US producers have successfully used their advantages, including MSC certificates, and maintained activity of sales onto foreign markets despite problems in economic condition of the major share of key markets. However, a 1.5-fold rise of quotas will hardly let traders maintain prices at the current level.