Post on 05-Jul-2019
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Snow Crab Outlook 2019John Sackton
Seafood DatasearchShippagan, Moncton, Shediac
March 27-28, 2019
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Background• 40 Years in Seafood Industry• Crab, shrimp, lobster and cod
market analyst since 1997• Preseason price and market
outlooks on shrimp, crab, lobster, cod – Atlantic Canada, Alaska, and US West Coast
• 2005-2018 Price arbitrator for Alaska crab
• Research on Mussel and Oyster Markets
• Co-Founder of NFI’s Global Seafood Market Conference
• Publisher of Seafood.com News
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Outline for Today• MarketHistory:HistoricHighPrices• WhatHappenedin2018• CanadianSupplyOutlook• GlobalsupplyOutlook• JapanMarket• USmarket
– FoodserviceProductSales– RetailProductSales
• MarketIssuesfor2019
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The snow crab market is at historic high prices
• Crabpriceshaveexceededtheirpriortradingranges• Mostoftherun-upinpricehasbeendrivenbyJapanesebuyers
• Globalcrabsupplieswillhavebeenincreasingfortwoyearsin2019
5
In recent years snow crab has broken out of its price band
Are we ina new$6.50 - $8.50trading range?
$1.50
$2.50
$3.50
$4.50
$5.50
$6.50
$7.50
$8.50
$9.50
1/2/921/2/931/2/941/2/951/2/961/2/971/2/981/2/991/2/001/2/011/2/021/2/031/2/041/2/051/2/061/2/071/2/081/2/091/2/101/2/111/2/121/2/131/2/141/2/151/2/161/2/171/2/181/2/19
25yearPriceHistoryforSnowCrab
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$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
0
20,000
40,000
60,000
80,000
100,000
120,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Julywhoesaleprice$US
GlobalSnowCrabSupply(MajorProducers)
Gulf+NS Newfoundland Alaska Russia RussiaBarents NL5-8
Long term changes in crab value
Financial Crash Loss of Japan
live CrabIncrease in Gulf,
NL
Supply shock;raw frozen Japan Buy
7
Canadian Frozen Crab exports to the US were down 23%
0
5000
10000
15000
20000
25000
0
10000
20000
30000
40000
50000
60000
70000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Metrictonsm
eatpickingforJapan
MetricTons
CanadianFznCrabExports
UnitedStatesofAmerica China Japan OtherAsia totalmeatpickingJapan
8
0
1
2
3
4
5
6
7
8
9
10
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018-oct
Snow Crab Annual Pricing (5-8 NL)
High
Low
Avg
= Oct 2018
Snow Crab Annual Pricing (5-8 NL)
9
Harvester prices also set record in Gulf
9
Shore Prices from Association des crabiers acadiens; DFO
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
VesselPricing- $CAMidshoreFleetPricing NBPricing QuebecPricing NLPricing
10
Can crab prices stay in higher value range?Japan• Brinefrozencrabmarketisshrinking
• Strongdemandforrawfrozencrab,butmarketcanbecomeoversupplied
• GlobalsupplyIncreasing• KeyquestioniswhetherChinaisbuyingsnowcrabfordomesticconsumption
US
• Retailerusageisdeclining• Foodserviceusageisdeclining
• Buyersarelookingforsubstitutesbuttheyarenotalwaysavailable
• In2018,lowersuppliesfueledstrongdemand
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0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
2014 2015 2016 2017 2018 2019YTD
Metrictons
Dungeness
Dungeness will not be as prevalent a substitute in 2019
12
2018 saw drop in landings in almost all areas
0
5000
10000
15000
20000
25000
30000
35000
40000
3L OtherNL 12,18,25,26 13,14,15,16,17 NovaScotia
Metrictons
Majorsnowcrabareas
2016 2017 2018 2019est
13
Prices Increased on larger sizes• USbuyersincreasedtheirshareofcrab• Japaneseincreasedtheirbuyingofrawcrab• 5-8crabshowedsomepriceweaknessintheAugust– FebruaryPeriod
• Lackofsubstitutesforsnowcrabkeptpriceshigh
• USMarketbecamemoreimportant
14
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
2013 2014 2015 2016 2017 2018
KG
ChangesinDestinationofNLCrab
JapanSections JapanOther(InclRaw) USsections
USOther JapanChangefromPriorYear USchangefromprioryear
US increased market share in Newfoundland
15
US Crab Exports by province
NB NB
NL NL
QBQB
NS NS
16
Exports to China for meat picking declined
17
More crab from New Brunswick went to Japan
18
MSC Impacts• MSChasrefusedtoliftthesuspensionofthecertificateintheGulf– Retailerstakingawaitandseeattitude– CrabFisheryhasoptionsduetostrongresponsetowhaleissuesin2018
– Highpricecanleadsomeretailerstolookforsubstitutes,butlobstercaughtinsimilargear
– WillnotaffectsalestoJapan,China• Don’texpectamarketimpactthisyear
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US snow crab supply down 14%
-40,000,000
-20,000,000
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
160,000,000
180,000,000
2011 2012 2013 2014 2015 2016 2017 2018
Pounds
USSNOWCRABSUPPLY
Alaska Canada Russia Norway/Grn/Latvia Other USExports
20
Russian imports increased, but did not make up decline from Canada
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
2014 2015 2016 2017 2018
Pounds
RussiancrabimportstotheUSIncreasedin2018
Russia Norway Greenland Lithuania China(mainland) Other
21
Retail promotions fell on snow crab, but rose on king and dungeness
2384130993
79968
3425839486
71525
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
Dungeness Kingcrab SnowCrab
Storesw
ithProm
otion
s2017 2018
22
Crab remains an important retail item
23
Snow crab is losing market share to other crab species
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CrabSpeciesMarketShare
snow king crabmeat SnowPercent KingPercent Crabmeatpercent
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Per capita consumption of all crab continues to decline
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
crab
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Same pattern exists at foodservice
-5.6%
59.8%
11.4%
-8.2%
89.8%
2.3%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
snow dungeness king
Changeinusageofcrabatfoodservice
2017lbs 2018lbs percentchange 2017change
2017percent
2018percent
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Make up of crab species sold at foodservice
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
2016 2017 2018
pounds
Snow BlueCrab Dungeness Crabmeat King Rock/Jonah NotSpecified Red/Centolla
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Snow crab sales at restaurants fell in all regions but southeast
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The foodservice economy remains strong in the US
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Future Landings of Alaska Snow Crab may grow to 100 million lbs
Survey datashows bestcrab recruitmentsince the mid 1990’s
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US market interest is unpredictable
• Verylittlecrabininventory• AlaskacrabpriceshaverisensincethestartoftheirseasoninJanuary.
• InitialAlaskasaleswere$.35belowlastyear,buthavesincerisen.
• Buyersappeartohaveacceptedhighprices,butaredecreasingpurchases.
• Questionfor2019iswhethertheincreaseincrabsupplythatisforecastwillbemorethanthemarketisreadytotakeattheseprices
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Japanese snow crab supply continues to decrease
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When crabmeat (brine frozen sections) are added decline is been continuous since 2014
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2010 2011 2012 2013 2014 2015 2016 2017 2018
JAPANSNOWCRABIMPORTS(includingcrabmeatfromChina)RussianFederation Canada Norway UnitedStatesofAmerica Korea,Republicof Others Crabmeat(sectionweight)
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The Japanese demand for snow crab meat (legs) is down
• Japanesesupermarketsaleshavebeendeclininginrecentmonths
• SalestoSushirestaurantsaredownalso.
• Theycannotafforda2000yenbrinefrozenprice
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Demand for raw crab is up however
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
KG
RawvsBrineFrozenforJapanraw brinefrozenJapan
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Alaska increased sales to Japan in 2018 due to having more product
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
AlaskasnowcrabtoJapan
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Japanese market issues: NB sends lower percentage of crab to China; more to Japan
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
NB NL NS QB
ExportsbyProvinceofSnowCrab
UnitedStates Japan China Indonesia
VietNam HongKong PercenttoJapan PercenttoChina
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Japanese pricing has huge impact on market
• Forpasttwoyears,Japanesecontractpricehassettheinitialmarketpriceforsnowcrab.
• Thisyeardemandforrawcrabremainsstrong,butdemandforbrinefrozenisveryweak.
• JapaneseofferedlowestpricesonAlaskacrab• Declineinusageofcrabmeatishavingimpact
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Crab prices increased again in 2018
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Newfoundland and Gulf prices are very similar
40
Russian import prices
41
The price spread between 8-10’s and 10 ups and 5-8 sections is largest ever
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Pricing on 5-8’s is sending a mixed signal: Prices are now lower than at peak of 2018 season
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
$10.00
Dec-Mar April May June July Aug Sep Oct Nov
PricesGoDowninAprilandMay
2009 2012 2014 2015 2018
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Years Harvester Prices decline have often happened after years when wholesale prices have fallen
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
ShorePricesforCrabinNewfoundlandandtheGiulfGulfNB NL
2009
2012 20132015
2019?
44
2010,2011,2013, 2016, 2017 Prices higher at end of season
44
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
Dec-Mar April May June July Aug Sep Oct Nov
PricesRiseinAprilandMay2010 2011 2013 2016 2017
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With the big spread in value by size, we looked at the changes in amount of large crab in NL
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2010 2011 2012 2013 2014 2015 2016 2017 2018
SectionSize5to8oz 8to10oz 10up Notcalculated(3-5ozNotJapan) percent5-8 percent8-10 percent10up
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Currency factor in US sales
2018 has seen a strengthening of the US dollar –a boon for Canadian exporters, and this appears to be continuing.
April - May
current
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Issues for pricing 2019• Marketdemand• SubstituteProducts• OverallSupply• Appetiteforcrabatcurrentprices
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Market demand remains strong in US, weaker in Japan
• USmarketdemandisverystrong
• Noinventoriesofcrabexist
• TemporarypriceweaknessinDec-Febon5-8’shasbounced
back
• InJapan,demandforsushicrablegsfrombrinefrozenisweak.
Crabistooexpensivefortheseusers
• Demandforrawcrabremainsstrong
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Substitute Products• Althoughretailerandfoodservicearelookingforsubstitutes,veryfewexist– Dungenesscrablandingslowerthisyear– KingcrabsupplytoUSandJapanwasdown– Lobstertailwasnotavailable
Thishasmeantthatbuyershavebeenforcedtochoosetostickwithsnowcrabeveniftheywantedtoswitchtosomethingelse
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Overall Supply• Forthefirsttimeinfouryears,overallsupplyofsnowcrabisexpectedtoincrease.
• BiggestareaofincreaseisintheGulfandinAlaska• EventhoughAlaskaseasonisover,someUSuserswillhavecontractedtheirneedswithAlaskacrab
• GreenlandandRussiawillalsoseelesserincreases.• Anincreaseinsupplywhenthemarketsizehasgottensmallerisaclassicscenariothatleadstolowerprices
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Appetite for crab• Notpossibletomakepredictions.• Currentpricelevelswereunexpectedinboth2017and2018.
• ThismeanstherecontinuestobeastrongappetiteforsnowcrabamongUSconsumers,especiallyinthesoutheast.
• Withfewsubstitutes,thismayhelpmaintaincrabvaluesathighlevels.
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Factors to Watch This yearKeepingPricesHigh• Lackofinventory• Strongmarketdemand• Strongdemandforlargersizes
• Disciplinedsalestacticsbybigproducersmaximizeprices.
• FavorablecurrencyratesforCanadianexporters
PushingPricesLower• IncreasesinSupply• WeakdemandforbrinefrozeninJapan,China
• AnyhiccupinUSeconomy,oraslowdown,couldbebadforcrabsales
• EconomicslowdowninChinaisalsohittingJapan,whereeconomymaybeweak
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Outlook
• LastyearImadeacorrectpredictiononprices:“Mypersonalgutfeelingisthatpriceswillstartoutstrong,butbythemiddletolaterintheseason,willseesomeflatpricesordeclines.”
• Howeverinventoriesof5-8’sdidgetsold,withsomeJapanesecancellationsgoingtoUSmarket
• Thisyearagainpricesseempoisedtostartouthigh.CurrencymayhelpmaintainCanadianshoreprices
• WholesalepricesintheUSmarket,however,arelikelytodeclinelaterintheyearasmorecrabisofferedthanthebuyerswanttotakeatcurrentprices.Achangeintheeconomyisabigrisk.Ingeneralthereappearstobeahighriskofholdingcrabsectionsthisyear,unlesspricesadjust.
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Thank you.Time for Questions