Market Update - December
The pricing outlook for Atlantic salmon for 2019 in general is trending up. Both Norway and Chile are having issues with sea lice – in the short term, this means more supply of smaller fish as farms harvest early to avoid losses but in the long term means lower total harvest numbers, which will push prices up.
Reports indicate that we are likely at the bottom of the market; demand in Q4 is lower than normal, so prices for January are not expected to rise as previously expected, and are likely to stay flat at current levels, though increases later in 2019 are still expected.
Overall global production of Atlantic salmon in 2018 is expected to end up 5-6% higher than in 2017. Chile is the main driver for growth, with harvest weights and output higher than in Norway; 2018 Chilean production is expected to be around 14% higher than 2017, and back to levels prior to 2016 when an algal bloom decimated the industry. In 2019, however, Chilean salmon production growth is expected to slow to only 3%.
Forecasts for 2019 have Norwegian Atlantic salmon pricing up around 5% over last year.
While the overall harvest of Pink salmon from the 2018 season was high, supply in the market is expected to be slightly lower than last year, owing to challenges Russian producers had in freezing and storing salmon. As a result, pink salmon prices are up around 7-10% over last year. Supply on keta salmon from Russia is very, very limited right now, with fishing for the season completed.
Quotas for king crab have been set, with the quota on Alaskan reds down 35%; currently, almost all Alaskan reds are going to the Japanese market at a premium, with only golds from Alaska going into the North American market.
Pricing on Russian golds have softened slightly in recent weeks, with supply improving slowly.
Production availability in China is low right now as a result of regular congestion ahead of the annual Chinese New Year shutdown in Jan-Feb, leaving many plants booked solid for the next few months.
Atlantic Cod raw material prices have softened slightly in the last few weeks, though the long-term outlook still remains high, as the 2019 Barents Sea quota was set at 6.5% lower than last year. Many feel cod pricing has reached a ceiling at which the market will bear pricing, so despite quota cuts, pricing may not increase much more than current levels.
Haddock raw material pricing, which has been on the rise for the past few months, has also softened slightly; the 2019 quota has been cut by 15%, so the while RM costs are back to similar levels as last summer, they may not drop further unless the US tariffs on Chinese products comes into effect, and decreases demand, putting downward pressure on pricing. The 25% tariff, which was to be in effect on January 1st, 2019, has been put on hold for three months while trade issues between the US and China are renegotiated; the current softening of haddock pricing is likely as a result of the already implemented 10% tariff, and the prospect of the 25% tariff later on.
Blue cod prices for 2019 will be up around 5-15%, with the bigger increases on the larger sizes.
Large sizes of sole fillets (5oz and up) are in short supply both in overseas H&G, and in on hand inventories in North America, with pricing increasing; catches are down around 10% year-over-year.
Pollock H&G pricing is up around 8% since August, and is expected to remain at this level until after Chinese New Year; there isn’t consensus on whether pricing will drop around 5% after CNY, or will remain the same.
The shrimp market remains a little unsettled, with some large differences being seen between packer’s quotes, and North American market prices starting to correct up; there is still a disconnect between raw material prices overseas and market prices in North America.
Raw material prices in India are slowly creeping up, though huge increases are not expected. Smaller sizes 31/40 and lower are weak, while sizes 21/25 and up are short, with premiums being seen on these sizes; pricing on large sizes may stabilize in the coming weeks.
The second major harvest in India is waning after peaking in early November. Farmers are harvesting smaller sizes earlier fearing price volatility and to mitigate risk of high mortality due to the onset of winter. Low market pricing may influence the seeding of the first crop for 2019, and there could be lower volumes and higher prices next spring as a result.
In Vietnam, black tiger and white shrimp prices are both stable, with weak demand; this is contrary to most other years when demand in the 4th quarter is generally strong, but this year markets are quiet; large sizes of black tiger shrimp remain in short supply.
The winter season in Nova Scotia, which is the last fishing season this year, opened last weekend, around a week later than scheduled because of weather, with initial catches disappointing. Live prices are very high right now with demand strong, so most production is going to the live trade, with low volumes being processed for frozen. Market pricing is firm right now, with inventories low. Once fishing from this season is complete, most plants will close in mid- or end-December for the season.
Heavy demand on tails will continue to put pressure on the market, with the most significant demand coming on mid-sizes from 3-4oz to 5-6oz. Lack of inventory on these sizes is pushing pricing upwards, and supply shortages are noted. Small sizes 2-3oz and 3-4oz are in particularly short supply, with no production of these sizes expected during this last season – the only product likely to be available is what is remaining from the last season’s production.
Demand on meat is uneven, despite lower prices from the fall season to stimulate movement; the peak season for meat demand is over with the ending of tourist season on the East Coast, though product is moving more quickly at this time than it did in 2017, and pricing is likely at the bottom; low production from this last season will likely push pricing upwards.