Market Updates for November 20, 2020
Dairy | Eggs
Large - No change
Medium - No change
Small - No change
Retail demand mixed. Supplies of extra large and large well balanced and held confidently. Market steady to full steady.
Dairy | Butter
Cream inventories are continuing to tighten as ice cream production starts to compete for raw material and hits it's production stride. Retail sales show signs of decline, but overall are still healthy. With restaurants reopening food service distributors are still coming back to the buying table, but orders are still below expectations.
Dairy | Cheese
Barrel - Lower
Block - Lower
The CME Block market responded to the governments release of another billion dollars in the USDA Box program. Speculators feel this will have an effect on the markets for the short term but will not be sustainable for the long term.
Meat | Pork
Lack of food service demand, robust slaughter and heavy hog weights are weighting on belly, ham and some trimmings prices. Spareribs, loins and butts prices are wavy, up one day and lower the next. Producers continue to offer excess product in this unsettled market.
Industry wide, there are a few reported cases of Covid. However it seems as if precautionary measures put in place earlier this year are preventing issues currently..
Meat | Beef
Over the past few weeks, we have seen a slight slowdown in production compared to the previous year; to the tune of around 2%. The cause is both cattle availability due to small placements of cattle of feed from earlier in the year, and COVID cases at the packing plant level starting to affect labor. Both of these factors will continue to affect production numbers throughout November along with the short Thanksgiving holiday week. More recent cattle on feed reports show close in placements are up around 4% which could lead to large cattle supplies through part of 2021. Demand continues to be strong at retail, food service is still soft and could continue if further restrictions are put in place. Rib demand is strong and with more at-home Thanksgiving some are trading up from ham or turkey. Expect to see another small bump in pricing as we normally do in early December. Tenderloins continue to be soft, we should start to see some small moves upward as we get closer to December. Grinds are in a good price range right now and continue to move well. With large cattle creating more 50% trim and increases in imports of lean trim, the price range we are currently at could continue if demand continues stable. Briskets are mainly being held up by retail features as foodservice demand is still soft. End cuts such as inside rounds are showing some strength as retail features have been strong. Expect some softening as we move closer to the Thanksgiving holiday.
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. Currently Limson has plenty of supply in the 8/16 oz size.
For Russian and Norwegian Cod Per Undercurrent News: The International Council for exploration of the Sea (ICES) has recommended that the cod catches in the Berents Seas are set at 885,600 MT in 2021. ICES advised the cod quota in the Beren's Sea for 2021 be set at a level 28% higher than the level that was advised last June for 2020 of 689, 672, MT . Prices for headed and gutted cod are currently firming, but this looks to be short lived. Finn Arne Egeness, a seafood analyst forecasts an 11% increase in global cod supply to 1.27 MMT for 2021. In 2022 Egeness predicted output would drop 8% to 1.17MMT. This likely increase in supply comes as prices have softened in 2020, due to the impact of the Coronavirus pandemic . Prices are expected to drop in 2021 and return to pre-corona levels in 2022. Currently prices seem to be more supply driven than demand driven. Landing prices drive the market and changes in supply will impact retail price rather than changes in the market will impact landing prices. It is also predicted with the increase in retail due to the pandemic would see fillet production overtake H&G in 2021, which is the first time this has happened. Currently we expect the price level to remain stable for the balance of the year . The 1x frozen Atl. cod loins from Canada are now being offered from the new 2020 season. Costs have been confirmed to be close to the same as last season. Canadian Cod is harvested in three general areas in northeast Canada that impact our supply. 2J 3KL (Northeast Coast).2020 total removals were recently announced at 12,350mt - same level as in 2019. However only 10,000mt was caught in 2019 which effectively means the fishermen have access to an additional 2,350mt in 2020. 3Ps (Southcoast). 2020 TAC was cut 55% from 2019. Limson's processor left 1,350mt of Canadian* fish in the water last year so the effective cut is more like 30% for Canada.* the cod quota in this area is shared between Canada (84.4%) and France (15.6%). 4RS 3Pn (West Coast) 2020 TAC is 1,000mt - same level as 2019.
Pricing has started to rise as orders for the holidays are being placed which is causing packers to negotiating for raw material. Inventory levels remain healthy.
Pricing has started to rise as orders for the holidays are being placed which is causing packers to negotiating for raw material. Have seen some shipping delays on open orders due to pandemic restrictions.
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. As the B season resumed at the end of June, first reports were that the fish were smaller only producing 2-4 oz sized fillets. Reports as of late are now saying the opposite where they expect to have fewer of the 2/4 IQF fillets for the fall and into the 2021 A season. For now Limson has product and does not expect any interruption in supply. Recently in Undercurrent News: Lower production of PBO comes as some sources feel prices might come under pressure this fall due to high levels of double frozen blocks in China and the EU. The dive in FS demand due to COVID 19 has created high inv levels , meaning the gap for single frozen fillets is widening from that of the double frozen. Time will tell if this gap closes as we progress into late fall. Recent reports from the NFI whitefish seminar stated that the B season was down 127.000 MT from 2019 due to Covid issues as they were trying to keep the virus our of vessels and plants. Over the last 2-3 years the B season has had great fishing conditions. For 2020 there was a change in fishing patterns and a younger fish class was noted , yielding smaller fish of more variation in size that resulted in a lower yield. The fleet has had to travel farther out to find the fish resulting in more days at sea and they have not schooled up this season making them much harder to catch. As a result production had decreased and they are behind overall. As the season wrapped up at midnight Oct 31 there were fish left in the water. Our supplier could not achieve all of their catch quota and left over 6.Million LBS in the water as they struggled with poor fishing and smaller sizes. However please note.... they do have us covered for product thought Lent and well into the Alaskan A season for 2021.
According to Undercurrent news and a recent Pollock Against the Pandemic Webinar... They have reported difficulties in shipping Russian pollock raw materials into the key China processing hub of Qingdao which means companies there are getting really short ahead of the Chinese New Year period. The municipal government has resolved to test all frozen seafood imports after claiming coronavirus can survive and transfer in the cold chain. As a result they feel the Chinese are now in trouble because they haven't covered themselves up to Chinese New Year so they need to fill up their plants wiht raw material , making supply really tight. For now prices are on an increase and there is uncertainty as to what the 2021 A season will bring. This will depend on how the season starts, the sizes of the fish and how much goes to block or H&G. Note Limson has covered their supply through the Chinese New Year,.
Per Undercurrent News: For haddock ICES is advising the TAC be lifted 8% for 2021 to 232,537 MT relative to the advise of 215,000 MT for 2020. Norway and Russia followed Ices advise for it's 2020 quota setting it at 215,000MT. Plants overseas are currently looking to negotiate on prices as they look to get product moving.
As we progressed through the summer season the landings of perch had been minimal at best. What we have been able to purchase is being offered out at a premium currently. Originally there was concern that this market could crash with no demand but to date the fishing is so poor on this species they cannot catch enough to make a difference. Costs remain elevated and taking walleye with perch purchases is still an issue when they are available for sale. For now walleye is available as we move through the fall fishery but costs have increased slightly on the smaller sizes. The availability of smelt is limited due to an overall shortage of the product. The season for smelt was supposed to have been underway but to date the fish are so small they cannot be eviscerated for sales and any offerings have been limited so the volume is not significant enough to supply current demand. We are hoping to be able to obtain more product if possible but at the moment the outlook on supply is bleak Prime fishing was missed for white perch due to the virus causing there to be a shortage of the product. White perch is just being offered this week but in limited quantities and we are not sure of the overall volume that will be available for the fall. New season whitefish is available at a slightly reduced cost.
Limson is covered on all sizes at this time but there is less inventory available overseas on the smaller 20-40 zander as we progress into the fall and this will come up short in the near future. Costs are starting to firm as of late on most sizes from overseas partly due to the exchange. Euro perch has increased recently due to the demand and lack of domestic perch for Food Service sales. For late summer, fall orders, we did expect a softening on cost purely due to the current exchange but that was short lived as of late with the dollar adjusting and increasing cost of goods. Note this is a lower cost option to the domestic product and eats comparatively.
Costs remain stable for an active demand in Food Service as of late. Note we have 4,6 and 8 oz portions that are vacuum packed and can be a great option for retail applications if sold as eaches. Per Urner Barry: Total frozen imports per season (Oct 2019-June 2020) registered 30 million pounds, a 42.9% increase compared to the same time frame for the previous season and is already 15% higher than the total recorded for the 2018-2019 season. It is important to note that the 2018-2019 season produced record low volumes. In fact, total production per season for 2018-2019 registered 26 million pounds, 18.75% less than the previous record low 2016-2017 season. Q2 (Apr-June) total frozen imports registered 24.6 million pounds, a 49.4% increase over Q1 which recorded 16.4 million pounds. Peru and Ecuador remain the two top producing countries of frozen mahi. YTD Imports per season from Peru (Oct 2019-June 2020) registered 13.2 million pounds, 3.6 million occurring in Q2, a 19.6% increase over Q2 2019. Peruvian imports peaked in March, outpacing their 10-year average by 33%. In addition, Q2 imports from Peru outpaced their 10-year average by 31%. As the October season just got underway first indications are that costs will take a slight increase especially on the smaller 4 oz portions that have faired well in retail sales. As more landings arrive we will have a better outlook on costs as we go into the winter , spring season for 2021. To date, offers have been minimal.
As of late costs have remained stable with a slight uptick on demand overall. Limson has plenty of supply on all offerings from steaks to saku to swordfish all in IVP packaging for retail sales as well. Vietnam –The catch is slowing down, and prices have creeped up 20¢ to 30¢ per pound since last month. Prices may continue to firm up until the catch is back on in, usually, late January/early February. Steak and Loin inventories seem to be tight. Saku, Poke and Ground Tuna (sushi items) availability is fairly abundant. Indonesia –Raw material is low. Prices in Indonesia are also firming up 15¢ to 25¢ per pound. There might be some relief going into November. SWORDFISH Asia – Being a bycatch of Tuna, Sword is the same story as Asian Tuna. Ecuador –Demand is on the rise and supply is just keeping up. The boats are retooling themselves for the Mahi season, so if demand continues at this pace, availability could become a challenge.. Per Urner Barry:Total Q2 frozen tuna fillet imports from all countries totaled 16.3 million pounds, a 31.9% decline compared to this time last year. YTD total imports registered 38 million pounds; a 14.7% decrease compared to YTD 2019; however, they are trending 42% higher than their 10-year average of 26.7 million pounds. It must be noted that 2019 marked a record year for total frozen tuna imports, registering 90 million pounds. The two largest suppliers of frozen tuna in Q2 continued to be Indonesia and Vietnam, representing 46% and 30%of the frozen market share, respectively. Q2 imports from Indonesia registered 7.6 million pounds, a 21.8% decline compared to Q2 2019. YTD imports registered 17.3 million pounds, a 9.2% decline YoY. Q2 imports for Vietnam registered 5.1 million pounds, a 43.5% decline compared to Q2 2019 and YTD imports are 27% lower YoY. As countries-initiated lockdowns to curb the spread of COVID-19, it has impacted fishing efforts, increased freighter costs, and disrupted distribution channels. Total fresh imports for Q2 registered 5.8 million pounds; a 42%decline compared to Q2 2019 and are down 29.6% YTD. Panama was the top producer of fresh tuna imports in Q2 with 2.2 million pounds; a 100% increase over Q2 2019 and is trending 208% higher than their 10-year average YTD, Panama exported 3.3 million pounds. As of late there has been a lot of noise surrounding IUU fishing and sustainability issues on tuna mostly out of the Indian Ocean. Note however Per Limson's tuna and swordfish supplier; We continue to make progress in the Vietnam Handline and Swordfish FIPs. (Fishery Improvement Project) The fishery was declared 100% handline in December 2019 and the tuna FIP showed significant progress in a 5 year FIP review at that time. We are fully engaged with Vietnam fisheries authorities and only have a few more hurdles to leap before entering MSC Assessment for both tuna and swordfish. On IUU, the vessels now have 100% Vessel Monitoring Devices (VMS) and these are being monitored by the government. Vessels entering unauthorized areas are being warned or sanctioned. The government has also issued an Annex to the new fisheries law (Decree 26) listing all ETP species as banned for capture and retention. This is new and we will help in the process of helping enforcers and fishers comply with it as an important part of the work here in Vietnam in Q4 2019 and 2021. As these issues are important to the overall tuna fishery no matter what region they are also important to Limson and their customers.
Per Undercurrent News: Global pangasius and catfish production is expected tp fall by 6-7% this year in response to an expected drop in supply from the biggest producing nation, Vietnam. Global pangasius supply is hard to estimate due to China's lack of public data releases. An overview on the 2020 OUTLOOK is as follows. Total pangasius exports are expected to be lower than 2019 around 25% due to COVID-19. Q2.2020 witnessed the hardest hit in the EU, China, Mexico and other global markets due to the nationwide lockdowns. China resumed pangasius purchases after re-opening in late April. Q3.2020, the U.S. and ASEAN showed recovery signs as export value increased by 47% and 19% respectively compared to previous quarter as these countries lifted the nationwide lockdown orders and stocked up for the incoming holidays • EU was hit by the 2nd wave of COVID-19, thus, demand was disrupted with a drop of 16% compared to Q2. Raw Material price has increased by 20-25% since late Q3 due to the surge of global demand while supply shrank slightly due to COVID-19. The price is expected to remain at a sustainable level.
Generally prices have remained stable most of the year so far. However raw material pricing/cost was also stable up until about May. Now for the past few months you have seen an increased competition for raw material. The reasons for this are due to high demand for many months at retail. Where they prefer 2-5 oz or 3-5 oz traditionally over the larger sizes. Larger sizes tending to be preferred by restaurants. Focus by some customers and plants on producing 4 oz and below due to the tariff exclusion.This means that plants are having to pay an ever-increasing premium to secure enough raw material from the farms to meet orders. Farmers do not make much profit on smaller sizes. So they prefer to wait until the fish grow bigger before harvest. Now packers and customers need the farmers to harvest sooner to get more smaller sizes. Farmers must be incentivized to do that. Packers are competing for the farm supply. At the same time that would of course mean there’s less available of the larger sizes if farmers are having to harvest sooner. Overall import volume reports from January through June saw a 25% increase over 2019 with February being high, March very low and then April, May & June back up. This was mainly driven by the retail demand for frozen seafood. Food service demand is starting to slowly pick up, though how fast has varied by region of the country, where in the re-opening phases. Due to the overall demand in retail and pick up in food service you will see prices start to rise until demand Stabilizes. Per Undercurrent News: Global production of tilapia is expected to remain stable despite the pandemic as a decline in output in China and Indonesia is offset by growth in Africa, SE Asia and the America's, according to an industry expert. For 2020 global production rose a notch 0.1% to 6.93 MT for 2020 with production stable and or growing in 18 our of 21 countries with tilapia industries. Growth is expected to return to pre pandemic levels in 2021.
Seafood | Shrimp
India and Indonesia have both struggled with the availability of workers and raw material along with getting Brood Stock as international flights are very limited right now. In the short term you may see some good pricing in the market as people are trying to move off old or excess inventory.This will have a larger impact come fall as this will limit the inventory availability which would cause increased pricing. Current shortages in the market are easy peel, cooked shrimp and smaller sizes on raw PD and PD tail-on as we have seen an uptick in retail and delayed shipments from overseas. Experts expect to see a drop in overall production output out of India by 30% for 2020.Ecuador has been one of the most impacted countries because of COVID. In 2019 China accounted for 61% of all Ecuador's shrimp exports. With the current complications between Ecuador and China Ecuador is faced with finding other outlets to move inventory with EU and the US being the highest probability. With India and Indonesia facing potential shortages Ecuador may be able to provide the solution on certain products.
Production out of Indonesia has been slow and steady without any major shut downs. The packers are backed up with excessive orders(for over 6 months in most cases) and most buyers have experienced extensive shipment delays causing current shrimp shortages in the US. Raw material prices there are escalating at much higher pace than in India and packers are taking major losses as order dates are back from January and February 2020. Packers are also handicapped and are not in position to take any new orders until they put some dent in their existing order book. Indonesia will continue to struggle through late 2020 when their season starts in Dec. However, they are expected to continue shipping at a steady pace.
We will see a rising market through summer and into fall as shortages continue to develop with the uptick in demand for both retail and food service. Normal harvesting has been disrupted as farmers panic harvested in March and April. Many farmers have reseeded but at 40-50% due to limited raw material. The next harvest is expected in September with a limited crop availability. Presently there is raw material available, but the cost is escalating as packers are bidding each other out in a race to fill their existing orders.
Prices have firmed due to limited supply,
The spring season started mid April to early May but was delayed due to the COVID-19 impact. Boats are being delayed as overall demand is down and cold storage is filling up. Retail continues to spike on 16/20 and 21/25 which has driven up pricing on those sizes across the market. Texas and Louisiana were just hit with a hurricane which has caused shipping delays. Packers are awaiting to evaluate the damage after the storm which may cause additional delays. The May/June production of small peeled was the lowest it has been in over 30 years, primarily due to lack of shrimping effort. The next opportunity for small peeled will be this fall with whites. Texas waters have opened up for shrimping (Mid July). The big boats that have been working off-shore La and AL have begun to come in with a mix of large white headless, brown headless, and large head-on for peeling (that would yield 31/35-61/70 peeled). Boat prices have steadily risen over the last several weeks on all raw material due to current inventory shortages, and demand from retail and the gradual opening of foodservice exceeding current supply and production. This is expected to last through August and into September.
At the moment peeled production is very light on all sizes, and no inventories seem to exist on 110/130 and smaller. The larger boats have really just gotten back to work after the storms, and barring any additional tropical disturbances they should be out for at least 30 days meaning early November. The boats are currently catching 21/25-41/50 head-on, which yields 36/40-70/90 peeled. As cold fronts begin to move down from the north the shrimp get smaller, and we typically see more production of 110/130-150/200 puds from mid Nov through mid Dec.
Domestic rock production typically starts on the Atlantic coast of Florida toward the end of July. At the moment there is no concentrated effort on rock, only small incidental catches of a few rock shrimp along with brown shrimp. It takes a long time right now to accumulate enough rock raw material to process.Targeted Domestic rock production typically runs from Late July through December. Mexican rock production in the southern gulf starts later in the year (typically November) and runs through the following spring. At the moment there is really no existing inventory of shell on or P&D rock. It will be late September before we see some availability.
Seafood | Lobster
Per Seafood Source: European Union lawmakers have voted in favor of a trade deal that would see the bloc’s tariffs on U.S. lobsters removed. The approval came via a 40–2 vote by the E.U. parliament’s trade committee, and follows up on a deal struck in August between U.S. Trade Representative Robert Lighthizer and European Union Trade Commissioner Phil Hogan. That deal would remove tariffs of 8 to 20 percent on imports of lobsters to the E.U., while the U.S. would half duties on imports of certain glassware, ceramics, disposable lighters, and prepared meals. In total, the trade deal covers roughly USD 200 million (EUR 169 million) worth of goods. The U.S. exported roughly USD 111 million (EUR 94 million) worth of lobster to the E.U. in 2017. The new deal would apply retroactively to any tariffs paid since 1 August.
For N Atl Lobsters the suppliers are having a hard time knowing what will happen due to Covid. To date the Maine catch has been marginal but there are still the fall season and time to make up any lack of supply. The tail business has been strong for the small tails, ¾, 4 and 4/5 tails because the retailers have been very active. Currently there are limited amounts of the larger sizes until fishing resumes in late fall in the 6/7 , 8/10 and up range. Most expect the plants to be cautious in what they pack . If orders are not there they will limit what they process to mitigate losses. Meat costs had been steady but after the holiday they have taken a significant rise in cost. The lack of lobster being caught in Maine has international implications as the evolution of C-19 saw frozen meat/tail inventory prices collapse in Q-1/20 and Q-2/20 was a transitional learning period for all involved. It was the middle of Q-3/20, when the lack of raw material became an issue and we saw venture capital take a position and arbitrarily raise the raw mat price by a buck a pound in what could be viewed as attempting to either set or perhaps corner the market. This flexing of financial muscle has “stimulated” pricing which could rise to winter 2020 levels pre Covid. Social distancing in the plants has made production of labor intensive products such as leg meat an issue and as a result the lack of “L” for CKL has limited the volume of this staple blend. The supply/demand commodity nature of lobster pricing has lent further credence to firming prices as witnessed by the live market. Depending on the source the landings in Maine may be off as much as 40%-60% YOY…………….and last year was not even close to the big numbers posted over the past 15 years. There are many that hope that the recent New Moon tides and the passage of Hurricane Teddy may have ‘stirred up the bottom’ and stimulated landings, it remains to be seen. It is not unusual for hard shell lobster prices to firm moving into the fall months. However, this year, NE hard shell select market prices have increased 50% since early August. By all accounts, stored hard shell inventory throughout the industry is low. Uncertain market conditions related to COVID-19 lockdowns and restrictions have compelled market participants to be cautious with their holdings. Typically, strong demand for the Chinese Fall Festival (Oct. 1) fuels buying interest in larger sized selects. Because pounded inventory is so much lower than a normal year, even a reduced demand is exceeding supply. A recent slow-down in the Maine catch has resulted in firming prices for firm shell product. NE firm shell halves prices are trading 15% higher than the 5-year average and are in line with 2019 prices. Typically, firm shell product makes its way into the processing sector. At these higher levels, processors have pulled back. Frozen inventories, due to limited processing during the Canadian spring season, is reported to be tight...
The WW tail market as for the N Atl market has decreased in demand for the Food Service sector. To date we have supply on all sizes . Note a significantly softer cost than last fall / winter as the market adjusts to the new normal Reports indicate the plants are social distancing to maintain production and that Brazil and Belize are not having any issues getting product processed. This year they seem to mirror the N Atl Market to capture their share of the market based on cost. However... there has been increased demand in the retail sector that has driven movement. As travel, cruises etc have been limited and the big parks remain closed or limited , many have chosen to use their disposable income on what in other years has been pricy product.
Seafood | Crab
The Alaska Dept. of Fish and Game announced the 2020/2021 crab quotas . Mostly the results confirmed industry expectations, although snow crab increases were lower than hoped.For red king crab, the precarious nature of the stock has led to a cut of 1.15 million lbs, which is 30% below the 3.8 million pounds quota set in 2019.The stock has been on a long term decline, and earlier management strategies would have completely closed the fishery. However, in recent years ADF&G has revised some of the thresholds, so that a weak recruitment leads to lower harvest levels, but not a shut down of the entire fishery.With conservative management, the stock is neither overfished nor subject to overfishing. The allowable biological catch has declined from 6 million lbs in 2019 to 3.54 million lbs in 2020, with the TAC set well below this level at 2.648 million lbs.Russian catches of red king crab are stable, and the loss of 1.15 million pounds in Alaska quota should continue the trend of high king crab demand and pricing.For snow crab, the 2019 Alaska harvest was 34 million lbs., with a biomass projected at 368 million lbs. Snow crab recruitment is very strong, and the projection biomass for 2020 was to grow to 610.2 million lbs, a 66% increase.However, due to the pandemic no crab trawl surveys were conducted this summer, so the TAC was set based on a continuation of trends identified in 2019. For this reason, ADF&G was more conservative increasing the TAC than the projected biomass might call for, with a 32% increase to 45 million lbs. in 2020.There will also be a small Bairdi or tanner crab fishery this year west of longitude 166 of 2.348 million lbs. Again, there was no survey, but there has been considerable revisions to the Bairdi crab models in the last few years, and the current ABC matches that of 2017-18, when the fishery was last opened.The snow crab announcement is generally looked upon as an important market indicator for the coming year.This year, snow crab has been one of the top selling seafood products, so much so that unlike many fisheries which have seen lower values in the pandemic due to the cutback in foodservice demand, snow crab is currently oversold, and back up to record price levels.
Seafood Source has reported that frozen seafood sales jumped 42 percent, and volume climbed 34 percent, for the week ending 23 August compared to the same week last year. ( IRI and 210 Analytics) U.S. imports of Canadian snow crab in July were up 31% to 17.391mm lbs. compare to July, 2019. At the same time average import value increased 14% in July . This increase in value indicates major repeat orders and future support even as the price went up. It's a fact that historically the U.S. receives about 80% of its total snow crab imports from Canada in May-July. Total U.S. imports from Canada for the three month period in 2020 were 10mm lbs. higher than 2019. Product has been limited since mid summer especially on large size Opilio. Snow crab prices have risen $1.00/lb on 8oz Canadian over the last month and 4% on 10 up with limited availability. Canadian snow crab prices with the exception of 5/8oz are now over 20% compared to the same period in 2019. In general all sizes are short and costs continue to climb.
As we move into fall we find some of the most important king crab fisheries. The Russian Far East, Barents Sea, and then the Alaska Red king crab seasons. Russia will be harvesting over 26,000 M/t and supplying the Asia live market as well as the processed markets in Japan, Asia, and the U.S. With the closure or curtailment of most food service operations and on line ordering, seafood marketers this year have been challenged to find other ways to move the product. Not many carryout restaurants serve king crab or snow crab so retail is the market of choice. The level of support at retail supermarkets and club stores for king crab and snow crab has been remarkable. Product flew through the system and we found that 69,268,393 lbs of Canadian snow crab alone was imported during the three month period of May through July! King crab volumes of course are much lower but also gained significant support from retail. Note the Alaskan Gold Crab season is underway but have seen limited offers or product in the lower 48 to date. For now costs on all sizes (Reds and Golds) have been firm and are expected to remain so through the holiday season.
Seafood | Scallops
Overall the scallops quota was cut about 15-18% versus last year (approximately 50 million pounds this year versus 59 million pounds caught last year). Landings are 30% lower this year on larger count scallops versus this time last year (10/20 and larger). Landings of 20/30 scallops are averaging mostly 28/33 (and smaller) count. While food service demand is lower this year, very high retail demand has caused boat prices to firm. 2021 Fishing quota is expected to be lower than 2020 which will increase the boat price. The scallop market will continue to firm with USA resources as recent auction prices are reflecting this trend. There is not much fishing left in the fleet, many trips being held for carry over due to small sizes, low catch rates, and southern problems with nematodes. Per Undercurrent : During an initial slow start. due to the widespread closure of restaurants across the USA and abroad in the spring , and the fear of a resulting market weakness, scallops sold for an average dock price below that of 2019 . As of the first week of October the average dock price jumped by 48% in the four months since then taken from a simple average the total dollars divided by the pounds harvested and obviously varies by size and quality. As a result frozen inventories going into the fall and winter are far less at the producer level . Expect the prices of the U10 through 10-20's to rise sharply over the next few weeks.
China production plants are still running at reduced volume (70%) as there is still a lack of demand around the world because of the Covid-19 impact. Pricing will most likely remain soft into the fall until suppliers have placed orders for the Holidays / Lent. Once this happen we may face an upward pressure on pricing.
Seafood | Salmon
Imports of frozen Atlantic fillets decreased when compared to the previous month 9.2 percent. However, on a YTD basis, imports are 26.8 percent higher. Imports from Chile decreased slightly 0.1 percent from the previous month but remains 23.8 percent higher on a YTD basis. Imports from Norway decreased 4.9 percent compared to the previous month but continues to see an 18.9 percent increase on a YTD basis. We must mention that we assume this HS code includes frozen portions. The frozen fillet and portion markets out of Chile were stable again this month. Pricing levels for both frozen fillets and portions are below the three-year averages. The market is unsettled; both higher and lower offers are noted; some discounting of aged product is also noted. In the market to this point, many participants reported a greater desire to see the fish sell fresh rather than go into the frozen market, again we will see how this begins to change over the next several weeks. Retail activity throughout the month of September followed closely to the 3 and 5 year averages for the number of buying opportunities. When taking a look at the average retail price, we notice that since about mid-August, pricing has tracked well below both the 3-and-5-year averages; each week overall average pricing trending lower. From a YTD perspective, the number of promotions are down 4.6 percent and the average price is 5 percent. Per Undercurrent News: Globally the picture for Atlantic Salmon shows that volumes have continued to increase in 2020 despite the coronavirus , with a growth rate of 3.6% globally this year, per Kontalis' data
The Norwegian Salmon industry has been operating during the pandemic, and although volume is down the pricing affected the large fish (6+ Kg) the most as this was for Asian markets. The food service industry has been heavily impacted as we know, but retail business picked up a lot of this volume and as such kept harvesting and production moving. With a mild winter, less harvesting in early spring we would think that we will see more volume pushed towards late summer and/or fall which normally will lead to pressure on prices, and more than the usual fall pressure. Prices are supposed to move up a bit based on FishPool, but we are not sure this will be the case as there is a large number of fish still in the water. Sea lice is becoming a bigger issue with warmer water and faster growth, so that could mean more small fish being harvested which again can affect future harvesting this fall. But the biggest question remains the exchange rate into the fall as the USD is getting weaker and weaker. Note per Undercurrent News : Norwegian salmon spot prices are likely to be volatile from week to week over the next month or so as harvest volumes are expected to rise year over year. Many expect the harvest profile for 2021 to be similar to 2020 with little growth the first half of the year with more fish during the second half. However supply growth next year is supposed to be negative for Chile during the second half of the year. Smolt released for harvest during the latter part of 2021 is down 26% y o y with only two more months left in the release period. Per Undercurrent News: Norwegian growth is expected to pick up next year, expecting Norway's Atlantic Salmon production volumes to rise by 4.2% in 2021, exceeding a national production of 1.4 million MT.
As supply has become more available 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 had diminished some, the picture is not all gloomy, as the retail sector has been booming and has taken up some of the slack. Note however even with the issues being reported government officials do not feel that this will affect production in Chile as they have been monitoring this closely at the plant level for some time and this industry is considered to be essential. Per Undercurrent News: Chilean salmon production is expected to drop by nearly 10% in 2021, according to the results of the Global Outlook on Aquaculture Leadership survey (GOAL) while other countries beside the traditional giants , look set to play a more prominent roll in the sector's growth in the coming years. The data painted a bleak picture for Chilean salmon production next year with volumes dropping by 9.4% to close to 650,000 MT in 2021. This comes after 2020's 6.6% volume growth , contributed to a steep oversupply and resultant price fall. 2020 is actually still a strong year by volume for the Chileans so that leads to a pretty serious price correction for 2021. Although production growth of 5.7% is then forecast for 2022, this would still mean that the country is not anticipating to return to 2020 production levels until 2023 at the earliest. Recently The frozen fillet and portion markets out of Chile have been weak throughout the month. Pricing levels for both frozen fillets and portions are very far below the three-year averages. The market undertone is currently barely steady to weak with lower offers noted; some discounting of aged product is also noted. In the market to this point, many participants reported a greater desire to see the fish sell fresh rather than go into the frozen market, again we will see how this begins to change over the next several weeks