By Les Hodges (May, 2016)
OVERVIEW: Go Big or Go Home!
Large Red King crab from Alaska and Russia are the bargains of 2016. Comparing prices from January through April the jumbo and large 4/7, 6/9,and 9/12 count Red King crab prices are flat or slightly down. On the other hand medium and small King crab are up 6-10% this year depending on size. On Snow crab the same holds true. With the prices of large Opilio close to Alaska Bairdi Snow crab, one can see value in trading up.
The Russian quota in the Far East is larger in 2016, but the shortage of medium and small crab can be explained. At any time this year 20-30% of the Russian Far East crab catchers report to be fishing for the lucrative Asia live crab market. What makes this possible is the fact that unlike Alaska, there is fishing for various crab year round. Over the last 5-10 years this lucrative market has become huge and an efficient infrastructure created to handle the volume.
In Korea, one company has built a facility that can store 150-200 m/t at a time and pumps in deep-sea water to the bonded holding tanks which helps keep the crab strong. The product is distributed to smaller holding tanks in restaurants where the consumer can pick out the crab they want for dinner.
Alaskan Opilio fishermen have caught 99% of the quota being taken as of this date. Alaska Bairdi Snow crab season is also finished. Demand for both items have been good with supplies limited.
Overall Canadian Opilio catch is expected to be down 11% from 2015 and production is at full force. A second round of Japan buyers settled prices this week with producer significantly higher than 2015. Canadian processors should begin to pack for that market shipping less to the U.S. over the coming weeks. Prices are down a little in Boston from initial offers with several major factors buying smaller quantities.
This newsletter is divided into two sections: one, a section on “REGIONAL CRAB FISHING” which details the latest harvest data; and two, a section on regional “REGIONAL MARKET UPDATES” which discusses imports, marketing trends and more.
REGIONAL CRAB FISHING >
Alaska Crab Fishing:
The Bering Sea crab fisheries for 2015/2016 are about done. Both Red King crab and Bairdi are finished and Opilio is at 99% of the quota. The majority of the Bairdi Snow crab this season was under 12oz in size which is slightly smaller than 2015. This is the second consecutive good season on Bairdi and the market demand in the U.S. has grown. The high prices of large Alaska and Canadian Opilio have pushed some users to Bairdi Snow crab due to the larger size.
Canada Crab Fishing:
The Canadian Opilio Snow crab fishery is moving quickly with inventories in Boston and Japanese contracts finalized this week at $5.55/lb. with Newfoundland plants. Although an earlier cheaper price was reached, it appears that the majority of Japan customers will be paying the higher price. Rather than pack for the U.S., plants will focus on the Japan business in the near future. Newfoundland is between 20-25% landed according to one source and Gulf landings heavy at a pace to finish in mid to late May.
Norway Crab Fishing:
The change in the fishing season has been positive for the live king crab market. Live Red King crab shipments sales to Korea in March were 42 m/t vs. 10 m/t in 2015. Year to date exports of live King crab to Korea are up substantially at 285 m/t vs. 55 m/t in 2015. Processed Snow crab exports to Japan were also up through March at 364 m/t vs. 57 m/t in 2015.
Russian Crab Fishing
There are 38 Russian vessels fishing crab in the Far East as of April 17 plus a number of vessels fishing in the Barents Sea area for Opilio.
8 vessels are fishing Bairdi Snow crab with 2 delivering live, 3 processing fresh frozen and only 3 cooked frozen. 9 vessels were fishing Opilio with the majority fishing for the Asia live and fresh frozen markets. 4 vessels are fishing deep-water snow crab Japonicus (3) and Angulatus (1).
There is a good effort on Brown King crab with all 7 vessels processing cooked frozen for the U.S. or meat market as Brown King crab sections has not been a successful in the live or processed market in Japan or Korea. There are 5 processors fishing Blue King crab with 4 vessels delivering for the live market. Overall we find that in late April that 21% of the Russian crab catchers in the Far East are fishing for the live market.
REGIONAL MARKET UPDATES >
Numbers for deliveries of live king and snow crab are difficult to obtain, but we can confirm deliveries are continuing and the business growing in spite of recent economic problems.
The China demand for premium live seafood continues to grow and place of origin is becoming more important to Chinese consumers. Seafood from Alaska and Canada lead the way. Lobster, King crab, Dungeness crab, and frozen salmon are popular with new items such as Argentina Red shrimp, Ecuador shrimp, British Gold crab and Alaska Black Cod.
E-commerce has become very important with consumers often getting product within 48 hours. Cold chain logistics are key to growth of imported seafood which online sales companies have developed over the last year.
The ¥ continues strong in 2016 and now sits at 107.2¥/USD as of 5/5/16. This represents a 11% increase since 1/1/16!
Japan crab imports year to date through March including meat are up 36% to 8,632m/t. Processed king crab and snow crab imports in March were up 110% and 55% respectively to 324 m/t on king and 1,538m/t on snow crab. Total year to date through March are 1,553 m/t on king crab and 3,649 m/t of Snow crab. Japan has paid higher prices in 2016 to obtain crab and sales are reported slow. Some marketers believe that they will have to wait for the fall holiday season to move most of the product.
The effect of the Japan/Russia treaty on IUU fishing has caused the live King and Snow crab market in Japan to basically cease.
Korea imports of live King and Snow crab for March reflect the much higher prices slowing demand. Snow crab imports for March were 424 m/t vs. 836 m/t in 2015. Prices were up to $22.15/kg vs. $13.72 in 2015.
Prices of both Norwegian and Russian live King crab were up in March with Russian King crab prices approaching Norwegian pricing of $36.68/kg. This gives the Russian producers no incentive to process for the frozen market. Russia is delivering Red and Blue King crab while Norway only Red King crab.
King Crab >
U.S. imports of King crab from Russia through March are up 343.9% at 10.328mm lbs. vs. the same period in 2015. For the month of March imports were us 281.9% to 3.896mm lbs. Argentine Santolla Red crab imports were off – 47.2% compared to March of 2015. Year to date Santolla is -39.3% to 1.212 mm lbs. vs. 2.018mm lbs. in 2015. Total King crab category is up 163.9% through March at 11.622mm lbs.
Large size U.S. and Russian King crab prices were stable in April according to Urner Barry. However, medium and small Red and Brown King crab increased 3% during the same period and holes are appearing in the inventories of marketing companies. Imports of King crab are up substantially, but most appears to be larger size crab. This explains the stable prices on the jumbo 4/7,6/9,and 9/12 count Red King crab. Users of medium and small King crab may need to shift to larger size King crab as inventory of medium lacks and prices compress.
The Russian Far East Red King medium size crab supply for the U.S. going forward will continue to be tight due to the impact of the live crab business in Asia. Only Brown King crab has no Asia live market and will come to the U.S. unless it’s purchased for the King crab meat market.
Alaska King crab is finished and in limited hands. Demand for Alaskan crab is steady with an established price premium on Alaskan over Russian product. Sellers are allocating product, as the inventory must last until new season later this year.
Snow Crab >
Snow crab imports from all sources were up through March compared to 2015 by 31.0% at 2.280mm lbs. The primary increases were from Russia up 26.6% year to date at 3.380mm lbs. and the all other category up 361% to 1.983mm lbs. The later category is from the Barents Sea area with processors Norway, Latvia, and Lithuania.
Snow crab led the way in April at retail chains representing 76% of crab ads followed by King crab with 20%.
The higher 2016 prices for Canadian Opilio should impact order sizes from Japanese companies and U.S. retailers. A number of users have moved over the past few months to Alaska Bairdi Snow crab.
Japonicus and Angulatus snow crab is shorter than 2015. The popular Korean crab restaurants and crab buffet business is consuming more of this product and a good portion is going for meat production in China.
Santolla Southern Red crab >
Imports of Argentine Southern Red crab that is reported under the king crab category is down -39.9% vs. last year with some product now heading to Japan buyers. The product quality has improved and combined with a cheap price built a following with retail and buffets as an alternative to small king crab. As importers push prices up, we will find out the price elasticity on demand.
Dungeness crab >
The California commercial fishery is underway with limited openings of sport and commercial fisheries. On May 12, the Dungeness carb fishing will start on the North Coast. This season starting this late presents an additional problem of soft or molting crab.
Prices remain firm with limited supply on both clusters and whole cooks.