The pricing outlook for Atlantic salmon for Q4 2018 and Q1 2019 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 (the average harvest weights for September were 250g lower than last year), 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, and prices should rise towards the end of the year – exactly when and by how much, depends on how many small fish are harvested, how extensive the sea lice issue is, and how quickly production is booked. Demand from Russia and China are also strong, which will push pricing upwards as well.
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.
Since the spring, king crab markets have been firm from Russia, with supplies very, very tight as a result of high demand for live crab, especially from Asia, and prices on frozen are up 15-25%. Current pricing is either stable or rising slightly, and outlook on further supply not encouraging.
Larger sizes of snow crab (8oz+) are very firm, with active demand; pricing on 5-8oz is steady, continuing well above the three-year average
Production availability in China is low right now, partially as a result of regular congestion ahead of the annual Chinese New Year shutdown in Jan-Feb, and partially as a result of the US tariffs on some Chinese goods at a rate of 10% in October and up to 25% in January. US importers are looking to get as much product out of China as possible ahead of January, leaving many plants booked solid through the end of the year.
The World Groundfish Forum published estimates for the 2019 catches of key white fish species. Overall, global supply of white fish species is expected to decline by 2.6% next year, which is a 4% drop over the last two years. The forecast per species, with forecasts from select countries of origin, is as follows:
With the continuing decline in Atlantic Cod forecasts, and demand remaining strong, H&G prices are up 5-10% since April. The 2019 Barents Sea quota was set at 6.5% lower than last year, and pricing is expected to rise in the new year as a result. Pacific Cod H&G prices, which increased this year as a result of quota cuts, are softening slightly but still remain high. Since both Atlantic and Pacific Cod are exempt from the US tariffs, some US demand may switch from haddock to cod in the new year, and this may push pricing up further on both cod species. Haddock, Atlantic Cod and Pacific Cod interact heavily with each other from a pricing and demand standpoint.
Haddock raw material pricing, which has been on the rise for the past few months, is starting to stabilize, and may soften slightly after January as a result of the trade dispute between China and the USA; this may offset increases that would be expected as a result of a 14% cut to the 2019 quota.
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.
Overall, global shrimp supply is increasing, with global shrimp production forecasted to increase 5.7% annually on average from 2017 to 2020 – much of this growth is expected to come from Vietnam, Indonesia and Ecuador, with India remaining stable, and China decreasing for 2018; with high competition and demand on commodity shrimp, many packers are diversifying their value-added shrimp portfolio in order to increase vendor loyalty, and minimize potential losses from significant swings in the commodity market.
In Vietnam, white shrimp supply is stable, and pricing is up slightly; demand from the US is weak right now, keeping pricing lower than it should be at this time. Black tiger pricing is stable, and though supply is low, it is enough to meet a weakened demand. China is expected to increase buying in November, which will likely push pricing upwards.
In India, the market is disordered, as prices increased this week, despite the fact that demand and market pricing from the US is weak, and orders from Europe and China are low. Increases have been particularly significant on sizes 16/20 to 26/30, because of low availability, and high demand on these sizes. Production output overall continues to be low, and most of the raw material harvested is in smaller sizes. The raw material situation is expected to improve in the next two to three weeks, and pricing could change accordingly.
Fishing in the Bay of Fundy has opened, but the area is small and almost all product is being absorbed by the live lobster trade; buying interest from both the live trade and processing sectors have pushed live prices above 2017 levels.
Maine landings in October continued to be uneven, with weather hindering supply, and some weeks better than others. Maine fishing will continue on for around another month and then wind down for the season.
The next Canadian season will open on November 22nd and last for 2-3 weeks before being closed by weather. Most plants will close in mid- or end-December for the season, leaving around six weeks left for production in 2018.
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 every week, and supply shortages are noted.
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. With the softened pricing, some operators have put lobster meat back on menus, which could buoy pricing.