Major wild, farmed whitefish prices firm with 2018 supply down

News   09/01/2018 - Nguyễn Trí Tín

Even before the news of the reduced quotas for pollock, cod and haddock for 2018 at the end of last year, prices for these key whitefish species were on the rise.

The increase in headed and gutted (H&G) cod prices from both the Atlantic and Pacific, as well as haddock from the former, has continued since the news of reduced 2018 total allowable catches (TACs) for Russian, Norwegian vessels and European vessels in the Barents Sea and US fishing firms in the Bering Sea and the Gulf of Alaska.

Then, with Russia reducing its pollock quota for 2018 and the total US TAC down slightly also, prices are firmer year-on-year on H&G and rising fast on pin-bone out (PBO) blocks, according to multiple Undercurrent News sources.

For farmed fish, Vietnamese pangasius prices are set firm and in China, tilapia raw material is steady. It’s likely to be the lower volumes of Pacific and Atlantic cod and haddock, as well as Russian and US pollock, that are likely to drive prices in 2018, however.

According to one Russian catching source, who did not wish to be named, the current level for H&G Atlantic cod offers for delivery to China in the 1-2.5 kilogram size is $3,900-$4,000 per metric ton. For haddock, he said the level is between $3,100-$3,150/t, delivered China.

A Norwegian seller, who also did not want to be named, agreed with the Russian on the cod level but said haddock is being offered at a higher level, up to $3,200/t. A US buyer of cod put Atlantic H&G prices at a slightly lower level, at $3,800-$3,900/t and haddock at $2,980-$3,100/t, however.

An update from Tradex Foods, a Canadian seafood supplier, from the end of November last year states that processors in China are bracing for higher prices after their New Year celebration, which falls on Feb. 16 in 2018.

The price development for headed and gutted haddock, going back to the end of 2013. Credit: Undercurrent News prices portal

“Several Chinese vendors we spoke to forecasted Atlantic cod raw materials to reach $4,200 or $4,300/t by January or February. For this reason, the bigger cod processors are hesitant to book out any production after their plants re-open after Chinese New Year, waiting instead until February to see where the raw material market is headed,” wrote Tradex.

Another market update from Tradex at the start of December said Chinese processors are expecting prices for haddock of $3,300/t after New Year.

For the bulk of last year, cod H&G prices were around $3,600/t, with haddock around $2,600/t.

The price development for headed and gutted cod, going back to the start of 2015. Credit: Undercurrent News prices portal

More news on Russian pricing will come this week, as companies come back from the Christmas holiday, which was on Jan. 7, sources told Undercurrent.

Russian vessels are out catching, but the country is only just “waking up” after Christmas, one source, who declined to be quoted by name, told Undercurrent.

For US Pacific cod, where the Gulf of Alaska TAC has been slashed 80% and the larger Bering Sea allowance reduced by 16%, J-cut, longline caught H&G prices have been closing on record levels.

According to the US buyer, longline J-cut H&G is between $4,350-$4,800/t, depending on size. In December, a senior US Pacific cod seller told Undercurrent he felt prices have peaked at this level, however.

For Russian H&G pollock, prices peaked around $1,280/t in November last year, before dropping off to around $1,220/t at the end of the year, according to Undercurrent sources.

The price development for headed and gutted pollock, going back to the end of 2014. Credit: Undercurrent News prices portal

“Yes, prices surged in November but now slowed a bit. Buyers are not ready for such fast edging up. Also they expect more fish to come to the market in December. But anyway demand is healthy, and pollock prices are generally firming up. We, as producers, are happy again,” one Russian executive told Undercurrent.

The same applies to pollock from the Russian Far East as cod and haddock from the country’s west: sellers have been on holiday and a price picture is not clear, sources said. However, H&G prices are likely to be firmer in 2018, due to the rising PBO prices.

“Nobody sells, nobody buys. There are no prices,” said one Russian sector veteran, who also declined to be quoted by name.

Fishing is underway, but sales are not being made, he told Undercurrent. “I keep fingers crossed,” he said, of the outlook for 2018.

“Considering the Chinese New Year holiday is coming, all plants are working hard for shipment before New Year,” an executive with a Chinese pollock processor told Undercurrent.

“I think new booking for 2018 catching will start soon. For us, we will book February delivery because our workers will be back end of February,” he said.

Processing plants will be on holiday from around Feb. 6 and get going again at the end of the month, he said.

PBO picture

Price quotes from Russia for PBO blocks -- for Marine Stewardship Council (MSC) fish caught in the Sea of Okhotsk earlier in the year -- were at $2,900/t (ex-warehouse, Europe) in December, compared to $2,350/t in July.

“Actually, I think prices are higher,” said one source. “I think the buyers would like a price of $2,900/t.”

During the 2017 Groundfish Forum, held in Lisbon, Portugal, vertically integrated US firm Trident Seafoods was said to be out in the market as a buyer rather than seller, with price levels for A season PBO blocks of $3,050/t being talked of.

In a recent interview, Joe Bundrant, CEO of Seattle, Washington-based Trident, declined to comment to Undercurrent on pollock price levels.

“I do not want to talk about price, the law of supply and demand will determine markets,” he told Undercurrent.

However, Bundrant said there would be more to come in 2018 on a Trident new product development drive around pollock, which has seen items listed in Walmart and Blue Apron in the US, as well as Starbucks in China, to name a few.

Demand for pollock -- driven by Trident -- is certainly rising and supply will be down.

In November, Russia set its 2018 TAC for pollock at 1.781m metric tons, a reduction of 5.8% y-o-y, according to a decree from the country’s agricultural ministry.

Russian vessels will have an overall TAC of around 110,000t less in 2018. The TAC in the Sea of Okhotsk fishery, certified to the MSC standard, is stable at 966,000t, however.

In the US, the Pacific Fishery Management Council recommended an increase of around 20,000t in the Bering Sea, Aleutian Islands and Bogoslof fisheries to 1.383m metric tons, the Bering Sea pollock TAC will fall 20% from 208,595t in 2017 to 166,228t in 2018.

The 42,367 drop in the Bering Sea means the 2018 TAC in the US is down 23,026t.

Cod, haddock cuts

The reduction in pollock -- especially if you look at MSC supply -- is not extreme. However, on Atlantic and Pacific cod, TACs are coming down in the Atlantic and Pacific by big numbers.

In the Barents Sea, Russian, Norwegian and vessels from other European countries have 775,000t to catch, a reduction of 13% y-o-y. The International Council for the Exploration of the Sea (ICES) was recommending a cut of 20%, however.

Looking at haddock in the Barents Sea, the TAC for 2018 is 202,305t, compared to 233,000t in 2017; a 13% y-o-y cut in line with ICES advice.

For the US Pacific cod fishery, the Bering Sea TAC is down 16%, to 188,136t. The TAC in the Aleutian Islands is 15,695t, stable on 2017. In the Gulf of Alaska, the 2018 TAC is down 80%, to 13,096t. In addition to having to cope with the steep cuts, the US Pacific cod sector is also anticipating difficulties with the Seafood Import Monitoring Program (SIMP), brought into play on Jan. 1. 

SIMP places much higher levels of documentation on US suppliers and processors in China, who are supplying Alaska-caught cod back to the US market. 

“We are being bombarded by data requests on vessel permits, cold storage addresses, gross weights, net weights and live weights," he said. "Our customers are concerned they will not have enough information, so they are asking for everything, including the kitchen sink," Lance Magnusson, managing director of the sales arm of US longline fishing firm Blue North, told Undercurrent in a previous interview. 

SIMP was created to address concerns about illegally caught and under-reported seafood and seafood fraud, but Magnuson -- like many in the seafood industry -- believes the regulation has created a lot of unnecessary headaches.  

“As far as I know, no IUU [illegal, unreported or unregulated] Alaska cod is being imported in the US. It saddens me that our Alaska cod industry is being saddled with non-productive bureaucracy to fight IUU seafood,” he told Undercurrent

Magnuson also takes little comfort from suggestions that the US National Marine Fisheries Service might go easy in requiring compliance over the first few months. “I think that’s being a little bit Polyanna-ish,” he said. “If the Chinese start having trouble getting a product into our country, they might start sending it to another country or they might stop buying it.”  

It remains to be seen what this possible trade issue might do to prices, however. 

Pangasius firm, tilapia steady 

It seems whitefish buyers may not find cheap prices for farmed fish, either.

According to a mid-December update from Siam Canadian Group, a Bangkok, Thailand-based frozen seafood supplier, Vietnamese farmed pangasius prices continue to firm, and supplies are expected to remain short for some time.

"Over the past week, many pangasius processors and exporters are declining to make new offers, and we are seeing some delays and even cancellations for existing orders to many different destinations from pangasius exporters," the company said in the market update.

Many farmers are now only selling raw material on a cash basis, as some major processors are experiencing cash flow issues, it added.

Late in November, Undercurrent reported that prices were expected to continue rising into 2018.

They peaked early in September, on limited availability of raw materials, and stabilized for a time at $2.55 per kilogram, delivered to the EU freight-on-board from Ho Chi Minh City.

One EU importer, and a Vietnamese processor and exporter, confirmed that prices had reached $2.70/kg 100% net weight, standard glaze, at the end of November.

For tilapia in China, raw material prices are pretty stable. According to an industry source, 500-800g raw material was at RMB 8.60/kg on Dec. 20, having been at RMB 8.40 on Dec. 10. A year ago, tilapia raw material prices were CNY 7.80/kg.

“So far, the raw material price is quite stable. I would believe for December, the raw material will still stay the same range. But after Chinese New year, the raw material should go up significantly following the usual trend,” he said.