Market Updates for April 3, 2020
Dairy | Cheese
The CME Block and Barrel Markets are starting to show the bearish effects of this Covid-19 environment we are in. Speculators feel the bears will continue to motivate the market in the coming weeks.
Block - Down
Block - Down
Dairy | Eggs
Retail demand very good. Supplies tight to short. Market firm.
Dairy | Butter
Cream supplies for butter making is readably available at low prices despite the jump in last weeks’ spot pricing; butter production is ongoing, helping to clear large volumes of cream. In general, the butter market is in a bearish state as the current supply outpaces immediate needs from buyers. Bulk butter inventories are steadily increasing as most butter processors prepare for the upcoming baking season needs.
Seafood | Finfish
The supply of the big stocks of wild whitefish are set to remain stable for 2020, lifting by less than 1% according to the forecast from the Ground fish Forum in October 2019. For Pacific cod the forum forecast has the total supply at 365,000 t in 2020 down from 387,000t. Note the Gulf of Alaska is completely closed in Federal waters for this season but the Bering Sea and the Aleutian Islands are still active fisheries . Overall this has driven a decline in Canadian and US landings from 185,000t to 158,000t as well.
The 1x frozen Atl. cod loins from Canada are now available with plenty of supply. Costs remain elevated over last year but are still a good value compared to other Countries of Origin for both quality and cost This could change come spring 2020 if new science indicates a change in the stock assessment as the formal quota announcement will be end of March 2020 (waiting to hear). In June ICES (Exploration of the Sea) advised the cod quota in the Barents Sea for 2020 to be set at a level 2% higher than it's advised level for 2019 of 674,678 t. At 689,672 t, in 2020 advise comes in at 5% lower than the total allowable catch for 2019 set by the Norwegians and Russians of 725,000 t. In general the total supply of A cod is forecast to rise slightly from 1.131 m tons in 2019 to 1.132 m t . For Now Limson has supply of Russian fillets.
Pricing will remain firm into the summer until we are able to see the impact of COVID-19 . Inventory levels remain healthy.
Pricing will remain firm into the summer until we are able to see the impact of COVID-19 . Inventory levels remain healthy.
The overall Pollock supply for 2020 is expected to remain relatively stable . The forecast at the ground fish forum for the US supply of Alaskan pollock for 2020 is 1.528 million metric tons, down from 1.552 m t in 2019. Note fillet prices for larger sizes are expected to increase as supply on these sizes is more limited. Per the Seafood Source publication... The largest fishery by volume in the U.S., the Alaska pollock fishery, is also facing its own set of disruptions, though it has fared better than some as the industry’s "A" season managed to avoid overwhelming disruptions. They have been able to harvest their catch and prices have held up well.
All of the Lenten needs have been secured and will remain strong through the holiday into early Summer. Pricing is expected to be steady through Summer. Wild Pollock will increase in demand as a high-protein variant. The anticipated increase in demand has many suppliers looking to become vertically integrated to reduce costs, and gain more control over the supply chain.
The tariff for haddock was rescinded in Dec as petitioned by several members of the National Fisheries Institute. In the fall there was a lack of product being imported in case the tariff was to be increased resulting in a shortage now on raw material in Asia, as we progress through Spring . As a result there is a severe lack of supply for processing once production resumes in China. The lack of inventory is expected at least through April / May until raw material can be exported to China , processed and returned to the states, but the bigger issue now if the severe lack of demand. For haddock out of Norway and Russia the TAC ( Total Allowable Catch) for 2020 is up 25% from 2019.
Note the following is copied off of the Lake Erie Committee publication for Total Allowable Catches for the 2020 season. As an overview, yellow lake perch will remain very short and the walleye will be larger in size and in more abundance as well. ANN ARBOR, MI—The binational Lake Erie Committee (LEC), composed of fishery managers from Michigan, New York, Ohio, Ontario and Pennsylvania—the five jurisdictions that manage the Lake Erie fishery—set total allowable catches (TACs) for 2020 of 7.805 million pounds of yellow perch and 10.237 million walleye. Yellow perch are allocated in pounds and walleye are allocated by number of fish. These TACs represent a decrease for yellow perch from 8.552 million pounds of fish last year and an increase in walleye from 8.531 million fish. Specific allocations of both species are presented below by jurisdiction. TAC decisions are made by consensus of the LEC. These decisions are reflective of the status of Lake Erie’s fish populations and consider the goal of sustainable harvest each year. The allocations are determined by the LEC after extensive, lakewide biological assessments, analyses, discussions, and consultations with stakeholders. The individual state and provincial governments implement the TAC in their jurisdiction in accordance with their respective regulations and management objectives. WALLEYE: Guided by the Walleye Management Plan, the LEC set a 2020 lakewide walleye TAC of 10.237 million fish, a 20% increase over the 2019 TAC of 8.531 million fish. The increased TAC reflects strong recruitment during the previous few years and expected increases in population size. The Province of Ontario and the states of Ohio and Michigan share the TAC based on a formula of walleye habitat within each jurisdiction in the western and central basins of the lake. Under a 2020 TAC of 10.237 million fish, Ohio will be entitled to 5.232 million fish, Ontario 4.408 million fish, and Michigan 0.597 million fish. Jurisdictions in eastern Lake Erie are outside of the TAC area, but harvest limits are set consistent with lakewide objectives. YELLOW PERCH: Yellow perch TAC decisions are the result of deliberations among scientists, managers, and stakeholders through the Lake Erie Percid Management Advisory Group, known as “LEPMAG.” Based on science and those extensive LEPMAG discussions, the LEC set a 2020 combined TAC of 7.805 million pounds of yellow perch. The yellow perch fishery is divided into four management units, which generally correspond to the eastern, east-central, west-central and western basins of Lake Erie. The LEC has strived to maintain sustainable harvest while responding to changing population trajectories. The LEC acknowledges that there has been poor recruitment of yellow perch in the central basin and expects that the TAC could continue to decline there. The five jurisdictions on the lake share Lake Erie’s yellow perch under an area-based formula. Pursuant to the 2020 TAC, Ontario will receive 3.737 million pounds, Ohio 3.139 million pounds, Michigan 0.192 million pounds, New York 0.203 million pounds, and Pennsylvania 0.534 million pounds. As with walleye, each Lake Erie jurisdiction is responsible for allocating its portion of the TAC.
The European supply on zander ,pike perch and euro perch has been more than adequate to date with no interruptions in supply . Limson is covered on all sizes at this time. Costs are expected to remain stable as well but demand has been non existent for Food Service sales. This is a lower cost option to the domestic product and eats comparatively.
Mahi Mahi has been secured from the 2019 fall season and Limson has supply on all sizes. Costs remain stable for limited demand in Food Service. The S American season does not resume until October and to date are unsure of any supply out of Asia due to the virus, as typically their season resumes in the spring and is weather dependant.
Vietnam - Peak season is going on in Vietnam now. Most boats set out after the Tet Holiday/ Chinese New Year, we expect prices to remain stable but we will not have any indication until they come back and the landings are in. There is a current shortage in the market of loins and by-products but Limson has supply on all sizes. Indonesia - There are regular Tuna landings now throughout all of Indonesia. There is still a glut in the market on Saku Tuna Blocks which affects production on other product forms overseas. We are not sourcing Tuna outside of Indonesia and Vietnam as we find they have the best quality with the highest food safety standards. Swordfish is a bycatch of Tuna in Asia, peak season is in Vietnam now and there should be more availability soon. Note reports have just surfaced that the virus has now fully hit VietNam so we are waiting to hear how fishing and production capacity will be impacted as well as price on subsequent arrivals . Current inventory is good for a very reduced and stagnant demand. Costs are stable.
By the end of 2018, inventory levels were high and costs were as well with the impending USDA catfish program. This change was handled well by the USDA overall and the big producers in Asia were deemed equivalent with few setbacks and no stoppages of supply. As a result the market went into a tail spin with excess inventory and falling prices. For the bulk of 2019 costs were soft as many are still working to clear up older inventory. There will need to be a price correction soon as the farmers also need mins. to operate and at current market levels that is an issue. For the US, demand has fallen off but has picked up significantly from Vietnam into China. Note; The US is expected to see 40% less imports of swai YOY.
Tilapia, once a big mover for the foodservice sector has seen diminished sales over the last year where imports have decreased. This commodity was included in the tariff war but many think Tilapia in general has gotten some bad press over the last few years based on the public perception. Some experts at the Global Seafood Conference cite a potential turnaround not only how the fish is perceived but due to the recent signing of "Phase One" of the treaty to resolve the trade war, we may see demand for tilapia turnaround. As such, global production of tilapia is estimated to increase from 6.5 million MT in 2019 to 6.8 million MT this year. The increase in supply should continue to keep prices flat and put this item back on the menu of many foodservice establishments.
Seafood | Shrimp
Pond stocking in India / Indonesia has happen but at a reduction due to the COVID-19 pandemic. Farmers are starting to harvest early and not seeding again until they see what happens in the world market with demand. In the short term you may see some good pricing in the market as people are trying to move off excess inventory. This may have a larger impact come late summer if farmers do not seed as this will limit the inventory availability which would cause increased pricing.
The seafood industry reports stable pricing on Tigers, however demand has been moving over to White shrimp, Spring harvest for Tigers out of Indonesia is seeing good supply on larger shrimp while the smaller sizes are tighter causing delayed shipments and an increase in pricing.
We are coming coming up to the main harvesting season (April-July) out of India and Indonesia. Inventory levels overall remain strong while pricing has firmed some as the Winter harvest did not produce to expectations. The COVID-19 pandemic has also haltered many shipments out of India and Indonesia as the demand around the world has come to a halt for food service distribution. Per Undercurrent News; In India, for example, the income of small farmers will decline and companies lending to this sector will also be hit, with the price drop already causing a decrease in seed dropping between 30-50% in the Asian country. Many shrimp farmers are likely to withhold from restocking during the current pandemic, Undercurrent learned meaning there is likely to be a sharp drop in price during the current crisis, followed by a steep rise as supply dries up later in the year -- assuming the market returns to normal.
Prices have firmed due to limited supply.
The spring season starts mid April to early May but may be delayed due to the COVID-19 impact. Boats are being delayed as overall demand is down and cold storage is filling up.
Smaller PUDs are tight in the market and driving up prices until we see what the new season (Starting Mid April to Early May) will bring
Rock shrimp production in both the US and Mexico was a bust this past year. Virtually no inventory and very high prices. Domestic rock season starts again July/Aug while Mexico is in Nov/Dec.
Seafood | Lobster
The lobster market has been heavily impacted by COVID-19. Most items (tails and meat) are heavy in Food Service so demand has dropped off significantly. As a result prices have been reduced as of late but with minimal demand it has had zero affect. To date it is unsure if the Canadian season will resume come May and the bigger issue might be the labor available to start production in the plants. For now we are in a wait and see pattern for this market.
The WW tail market as for the N Atl market has decreased in demand for the Food Service sector. To date we have supply as the new season will not resume until June, with first arrivals expected in July...if the Caribbean countries can resume production as well by that time frame. Costs have softened at this time.
Seafood | Crab
Per Undercurrent News:The Fish, Food and Allied Workers (FFAW-Unifor) union of Newfoundland and Labrador, Canada, has voted to delay the snow crab fishery until "at least" April 20. Its elected snow crab committee members made the decision to recommend that Fisheries and Oceans Canada [known as DFO] postpone the crab fishery in light of the COVID-19 outbreak."The committee chairs and Inshore Council will continue to evaluate the situation on a daily basis to determine whether that date should be extended further." In addition Nova Scotia is delayed until Apr 15th . Zone 17 in the Quebec region is allowed to fish but that quota is reported to be down at best 45%. The North shore in this region (zone 15, 12C and 16A) is delayed until Apr 13th. Zone 12, which for some demands a premium due to the clean shell crab is moved out to Apr 15th. In summary there is potential that further delays might be mandated for this fishery. As it stands today we do not expect new season arrivals until late April early May. Initially the Canadian fishermen wanted to get an early jump on the season to avoid any right whale presence but if these issues persist this could end up being a huge problem for the viability of this resource. For now any existing inventory is still high on cost. The relief from the Alaskan season did not materialize prior to the COVID 19 pandemic and what is available currently is limited.
Currently the seafood sector reports that king crab is selling well in retail with very minimal sales in Food Service as expected. Right now the market is stable and larger size king crab remains somewhat limited and tight. Costs have leveled off on current inventory. Some processors indicate costs will firm by the summer.
Seafood | Scallops
Scallop costs have up ticked some for April as inventory has tightened prior to the new season arrivals. Costs typically increase month over month until the season resumes come spring. However , due to COVID 19 and the fact that the Food Service sector has been greatly challenged many expect there could be a significant downturn as the boats get fully underway. The quota has changed drastically with reduction of closed areas and the reduction of NEast closed area fishing as well. In general: 17-20% reduction in total catch = forecast is about 10 million # less than 2019. Nantucket “deep” south = forecast is 6.2 million lbs which is currently shucking meat counts of 40/50s and smaller – so this may see a full effort from the boats depending on price or many may decide not to fish due to the increased work, days at sea as this takes a lot more effort for 1lb of scallops, puts added pressure on the guys on the boats, and takes double the time. Boats will fish but its another 6 million lbs that WILL NOT BE 10/20s and bigger reducing total availability of these larger sizes. Less trips, less money for 40/50s , more southern/mid-Atlantic scallops ( that have reduced quality in summer, and possible parasites in south areas) will potentially see many boats spread their fishing out and lower the landings in summer that can drive the auction lower. In general movement has been minimal
Ocean Perch raw material was coming up short delaying shipments and firming up costs.
Seafood | Salmon
Demand was outpacing supply on the global market for Salmon until recent events. Despite the spread of the virus in China and later Europe, salmon prices initially remained “surprisingly strong” and dropped only in the last couple of weeks on fresh. Volumes going to China, which account for about 5% of total supply, were absorbed by other markets. When the crisis started to affect European markets, consumption from the foodservice sector -- which accounts for about 25% of the total -- was offset by a rise in retail orders, again on fresh.As a result, salmon demand has relatively held up and didn’t drop as significantly as some other markets. As the fresh market has struggled getting room in the bellies of planes, the frozen market has seen some reduction on cost out of Norway due to limited demand for Food Service. Farmers are already leaving salmon in the water for longer or freezing some products. This could mean there will be higher supply for the second part of the year, depressing prices in a period of the year normally characterized by lower demand.
Travel restrictions imposed by the Chilean government have impeded the country's capacity to export salmon to the United States for fresh. Internally Chile also announced the ban of transport trucks for farmed salmon on the Island of Chiloe as there was concern over the spread of the virus via truckers. But even as supply tightens, a massive drop in foodservice demand as the COVID-19 pandemic widens, has prompted mass closings of bars and restaurants and caused US salmon prices to fall, not rise. While US foodservice demand for salmon has dropped, the picture is not all gloomy, as the retail sector has been booming and has taken up some of the slack.