Snow Crab Outlook 2019 · Russian crab imports to the US Increased in 2018 ... Stores with...
Transcript of Snow Crab Outlook 2019 · Russian crab imports to the US Increased in 2018 ... Stores with...
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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
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In recent years snow crab has broken out of its price band
Are we ina new$6.50 - $8.50trading range?
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25yearPriceHistoryforSnowCrab
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Julywhoesaleprice$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
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Canadian Frozen Crab exports to the US were down 23%
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Metrictonsm
eatpickingforJapan
MetricTons
CanadianFznCrabExports
UnitedStatesofAmerica China Japan OtherAsia totalmeatpickingJapan
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2018-oct
Snow Crab Annual Pricing (5-8 NL)
High
Low
Avg
= Oct 2018
Snow Crab Annual Pricing (5-8 NL)
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Harvester prices also set record in Gulf
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Shore Prices from Association des crabiers acadiens; DFO
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VesselPricing- $CAMidshoreFleetPricing NBPricing QuebecPricing NLPricing
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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
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2014 2015 2016 2017 2018 2019YTD
Metrictons
Dungeness
Dungeness will not be as prevalent a substitute in 2019
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2018 saw drop in landings in almost all areas
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3L OtherNL 12,18,25,26 13,14,15,16,17 NovaScotia
Metrictons
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2016 2017 2018 2019est
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Prices Increased on larger sizes• USbuyersincreasedtheirshareofcrab• Japaneseincreasedtheirbuyingofrawcrab• 5-8crabshowedsomepriceweaknessintheAugust– FebruaryPeriod
• Lackofsubstitutesforsnowcrabkeptpriceshigh
• USMarketbecamemoreimportant
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-30%
-25%
-20%
-15%
-10%
-5%
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-5,000,000
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KG
ChangesinDestinationofNLCrab
JapanSections JapanOther(InclRaw) USsections
USOther JapanChangefromPriorYear USchangefromprioryear
US increased market share in Newfoundland
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US Crab Exports by province
NB NB
NL NL
QBQB
NS NS
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Exports to China for meat picking declined
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More crab from New Brunswick went to Japan
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MSC Impacts• MSChasrefusedtoliftthesuspensionofthecertificateintheGulf– Retailerstakingawaitandseeattitude– CrabFisheryhasoptionsduetostrongresponsetowhaleissuesin2018
– Highpricecanleadsomeretailerstolookforsubstitutes,butlobstercaughtinsimilargear
– WillnotaffectsalestoJapan,China• Don’texpectamarketimpactthisyear
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US snow crab supply down 14%
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Pounds
USSNOWCRABSUPPLY
Alaska Canada Russia Norway/Grn/Latvia Other USExports
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Russian imports increased, but did not make up decline from Canada
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RussiancrabimportstotheUSIncreasedin2018
Russia Norway Greenland Lithuania China(mainland) Other
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Retail promotions fell on snow crab, but rose on king and dungeness
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Dungeness Kingcrab SnowCrab
Storesw
ithProm
otion
s2017 2018
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Crab remains an important retail item
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Snow crab is losing market share to other crab species
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CrabSpeciesMarketShare
snow king crabmeat SnowPercent KingPercent Crabmeatpercent
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Per capita consumption of all crab continues to decline
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crab
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Same pattern exists at foodservice
-5.6%
59.8%
11.4%
-8.2%
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snow dungeness king
Changeinusageofcrabatfoodservice
2017lbs 2018lbs percentchange 2017change
2017percent
2018percent
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Make up of crab species sold at foodservice
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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
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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
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RawvsBrineFrozenforJapanraw brinefrozenJapan
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Alaska increased sales to Japan in 2018 due to having more product
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AlaskasnowcrabtoJapan
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Japanese market issues: NB sends lower percentage of crab to China; more to Japan
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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
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Russian import prices
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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
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PricesGoDowninAprilandMay
2009 2012 2014 2015 2018
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Years Harvester Prices decline have often happened after years when wholesale prices have fallen
$-
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ShorePricesforCrabinNewfoundlandandtheGiulfGulfNB NL
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2012 20132015
2019?
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2010,2011,2013, 2016, 2017 Prices higher at end of season
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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
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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