May 2024 Seafood Report

SEAFOOD UPDATE

SHRIMP

1.

Retail Sales Decline: Despite reduced shrimp prices, retail sales in the US market have declined. This can be attributed to cautious consumer spending habits influenced by prevailing economic conditions. Consumers are opting for lower-priced protein alternatives, impacting shrimp sales negatively.

Food Service Sector: While food service sales remained stable during the Lent season, escalating labor, energy, and other operational costs have led to an increase in prices. This poses a challenge to sustaining sales throughout the year.

Upcoming Demand Opportunities: The anticipated surge in summer demand after the Lent season is expected to stimulate shrimp sales, offering potential avenues for market recovery. 3.

Transit times remain longer than normal, and while the Panama Canal conditions are improving, the Suez Canal remains problematic. Freight rates are stable and modestly higher than they were before the war broke out. With Ramadan ending, the flow of information should increase as closures impact the markets. The percentage of responses for quotes has been lower than normal.

Pricing for Vannamei should only fluctuate once the anti-dumping numbers are announced. However, upward pressure in Ecuador will drive the market higher. Modest price adjustments and fine-tuning are expected until the last piece of the duty puzzle is announced in June.

It is hard to advise doing anything but staying in stock until the full dumping rates are known. It is still apparent that 2024 will average higher pricing than 2023, but from a historical perspective, shrimp prices will still be attractive.

Another factor impacting the markets is the increased testing by the FDA, which is causing just-in-time inventory plans to be very uncertain. There are more containers on exams than at any other time in recent history. Waiting to find out if your product is cleared will not only cost money and storage but will also cause confusion about buying. If a container fails, replacements are needed quickly, but if it passes, we may have more than needed.

Uncertainty causes inaction. Making long-term decisions is harder than normal, with more risk than normal.

The US shrimp market continues to face challenging circumstances, marked by shifting consumer preferences, rising operational costs, and dynamic import trends. While shortterm challenges persist, opportunities for market rejuvenation are anticipated due to summer demand. Vigilance and adaptability will be essential for stakeholders to effectively navigate the evolving landscape.

Until June, expect greater advances than for declines in price and continue to expect smaller on-hand availability and greater than normal cross-trade transactions.

2.

TILAPIA

BAY SCALLOP

The Chinese Bay scallop season has ended, and prices continue to firm on noncommitted inventory. Japanese Hokkaido Scallops are available, but with China's embargo on Japanese seafood, some Chinese packers are moving production to Vietnam and Thailand. The situation is very fluid, and it remains to be seen if the markets will firm more or plateau.

Tilapia is starting to come back after the massive loss of ponds due to flooding. May/June starts a new harvest period, but it is speculated that the Tilapia market will not return to last year's levels. Many farmers refused to restock Tilapia ponds after the losses of 2023. What has kept fish reasonable has been a lack of factory orders. That has now shifted, and many factories' production schedules are filling up. As with all categories, all costs have increased. Now, we are beginning to see farm price increases due to some farmers re-seeding ponds, but the grow-out usually takes about five months from stocking the ponds. The current raw material supply is still insufficient. Hopefully, this situation will improve by June or July.

IMPORTED CATFISH

At present, the supply of catfish raw material is relatively stable, and the current prices are attractive. Now is a good time to discuss new contracts. The reason for low price is the current Chinese domestic consumption of catfish has not been that strong. From the end of 2023, the raw material farm price for catfish continued to decline. Currently, the farm price for catfish raw material is about 20%-25% lower than the cost to raise the fish. Many farmers gave up seeding ponds last season. Compared with the previous year's data, the number of smolt dropped by approximately 40% -50%.

POLLOCK

Pollock has been a value and there is still some inventory in China for processing. The A season ended in late March. The price of Pollock raw material has increased due to the season's close. The catch volume was down, which, combined with the USDA committing to a large purchase, could cause us to see prices continue to strengthen. Also, China's domestic market is now increasing consumption. Currently, raw material prices remain firm. The Alaska-origin raw material price is very strong at $1700/MT, but the supply is inconsistent. This causes many of the packers to struggle with the raw material supply from Alaska.

COD

Cod raw material stocks are short, and prices are strong. There is very little inventory in China for processing. The U.S. domestic market is utilizing almost all the current supply. Alaska could struggle to supply current domestic needs. Prices will remain strong and potentially strengthen further as we get close to the next season in the fall/Winter of 2024.

FLOUNDER

The flounder harvest is low in Alaska. From February through March, the catch was off by 40% compared to the same period last year. The raw material inventory is relatively low. Some Chinese producers have signed raw material contracts, but the primary producers of whole fish in Alaska are delaying shipments due to the fish shortage. Harvest continues to be spotty, and it is uncertain what the future holds.

PINK SALMON

The current pink salmon price from Russia has increased, and limited inventories are on hand. A lot of the Russian RM is reportedly poor quality. The US-origin raw material is becoming scarce due to the current administration’s ban on Russianorigin seafood. The current offer for raw material from Alaska has increased by around 300-400 USD per MT. It is an even year, which indicates the Pink Harvests in Russia and Alaska will be smaller than the A-season of 2023. Some are predicting that the opening Ex Vessel price for pink salmon from Alaska will be around $1.55/lb. - $1.60/lb. (the opening price in 2023 catch was around $1.02/lb.). We feel that the real jump in price will come with the new AK season as the combination of lower seasonal harvests and rumored closures of processing plants in AK, along with the fisherman reeling from low prices last season, harvest will be low and dock price high.

MAHI

Taiwan Mahi

The season has started, and the harvest is average. However, Taiwan’s season this year will be shortened as there will be a national holiday event for the fishermen, with fishermen ending their season voluntarily. Current daily landings in Taiwan are up to 50 tons of RM a day.

Peru Mahi

The harvest volume was generally larger than in previous seasons, with stable and firm prices until February. However, the prices softened in Q2 due to the presence of smaller-sized fish and higher inventory than usual. The season started in Q3 2024 with smaller fish which increased the availability of retail portions. In addition, the higher inventory was affected by a delay in purchasing decisions due to importers and retailers who have had higher than average stagnant inventory. Sales at the retail level seem to be increasing due to lower retail costs so the outlook is for increased sales moving forward.

SKIPJACK TUNA

Skipjack raw material price for 1.85 Kg size fish continues trading around $1300 /MT primarily due to fairly sluggish global demand and steady daily harvest tonnages. However, daily tonnages have recently declined from around 35 MT/vessel/day down to levels below 30 MT/vessel/day.

There is growing talk about fish prices firming up in the coming weeks as we get closer to the upcoming Tuna Conference, which takes place May 20th through May 22nd.

As a reminder, the demand for MSC certified fish continues to show continued growth amongst both major retailers and some food service distributors. In the past, the cost differential between MSC certified Skipjack and Non MSC certified fish was nearly $150/$175/MT, today this has been reduced to only $50 +/- /MT, making it much more attractive to many brand owners. FAD free cost differential has also been reduced to only $30.00 +/- /MT higher than non-FAD free.

ALBACORE

Long-line Albacore appears to have bottomed out and is heading for an upward correction in the coming weeks. Fishing fleets are facing increased pressure due to rising fuel oil prices, which account for a significant percentage of their overall overhead costs. Albacore is currently trading at levels ranging between $2350 and $2400/MT, depending on fish size and quality.

With Albacore raw material at such extremely low pricing, it is highly recommended to take a longer position before prices start to firm up again.

The supply of MSC certified Albacore is alarmingly scarce, with only a few MSC fisheries for this species. This scarcity, coupled with the growing demand among large US retailers , has led to a significant price spread between MSC and Non MSC Albacore, surpassing that of light meat tuna. Caution should be taken as supply may not meet demand. The average cost differential between MSC and non-MSC Albacore ranges between $400 and $600/MT (quite substantial, but is the result of limited MSC fishing grounds and supply).

No change to report. Tongol catch has dropped off and fish price has moved up.

Current raw material price ranges between 54/55 Baht/Kg.

Pricing for finished product remains firm/stable.

TONGOL TUNA

YELLOWFIN TUNA

Yellowfin continues trading at levels or very near to $2400/MT for delivery to canneries at the end of May/early June (much of the fish is reported to be large sized (above 20 Kg, which can lead to a darker color in finished goods. Smaller sized fish are trading at slightly higher levels, but have much better color).

We may see some firming of Yellowfin in the coming few weeks as the catch ratio is starting to go below 10% of the overall catch between Skipjack and Yellowfin Tunas.