By: Ola Wietecha, Undercurrent News, September 9, 2015.
King crab prices continue to increase as supply to the US suffers, with supply limitations from Russia’s shift towards Chinese markets seen as a major factor.
Data released in the last few days by the National Marine Fisheries Service verifies a significant 12.5% drop in overall king crab imports from 8,015 metric tons for the first seven months of the year to 7,072t year-on-year.
Imports, particularly small and medium king crab out of Russia, dropped drastically at the start of 2015, and prices began to rise in April and May of this year.
According to Les Hodges with Keyport, the lag can be attributed to the carry-over of product from 2014 into 2015. Since then, however, imports have continued to fall and prices have risen in response.
“What we’ve seen is a consistent tightening [on supply] of the smaller sizes,” Hodges told Undercurrent News.
Drastic jumps in prices of small and medium sized crab reflect this decrease in supply. According to the most recent Urner Barry report, prices on product sized 20-24 per 10-pound bag increased 22.2% from $9.85/lbs in January to $11.94/lb. in September; 16-20 count increased 29.6% from $9.97/lb. to $12.92/lb. and 14-17 count increased 22.3% from $10.80/lb. to $13.21/lb.
According to Hodges, these shifts aren’t surprising in light of the shortage of mid-sized crab, and retailers are feeling the increase in price.
“[The price] is moving up right now at about 3%+ rate per month,” he said, “as it increases in price, we’re seeing that retailers who have been supporters of king crab over the last year and a half are now beginning to pull to the wayside.”
These trends have not effected the largest varieties of king crab, however.
“We’ve seen some of the larger sizes decline in price on the order of about 10%, that was our observation from earlier in the year to mid-summer,” Bob Simon of Seattle-based supplier NOVA Fisheries said.
Growing Chinese demand
Although the the illegal, unreported and unregulated (IUU) fishing crackdown treaty between Russia and Japan is often cited as a possible reason for the supply drop this year, some claim that a most realistic reason for the decline is entirely different.
A shift in Russian exports towards China and away from US markets was a major reason flagged up to Undercurrent.
Russian fishermen are said to be focusing their fleets more on live catches to be delivered directly to Chinese consumers, whose growing middle class is willing to pay higher prices for the luxury commodity.
“The treaty with Japan has curtailed the amount of king crab going into Japan because they are not accepting IUU product, but the weakness in the [Japanese] yen, combined with the strength of the Chinese market…is where the product has gone” Hodges said.
Jake Jacobsen, executive director of the Inter-Cooperative Exchange, has also noticed this change and says that, given the potential of Chinese markets, he has expected this shift to the Chinese market to occur for a long time.
“It’s not surprising to me at all…The Chinese market has stepped up, and they want the product; it’s just taken a while to develop the market…I’m just wondering why it took so long to happen”
Whether these prices will remain high or will decrease again remains to be seen.
Significance of Russia-Japan treaty uncertain
Sources are divided on how significant the impact of the Russia-Japan IUU treaty signed in December has been.
“A lot of [these drops in imports] are a response to the Russian crackdown on illegal fishing,” Jacobsen told Undercurrent.
However the extent to which the treaty caused these shifts is difficult to determine. Some go so far as to say the treaty has had no effect at all and will not significantly affect US markets in the future.
When asked if he thought the treaty would ever have a notable effect on US markets, Hodges replied, “not really, mainly because the Russians simply move where they ship their product”.
Re-printed with permission of Undercurrent News.