Groundfish Market Report - June 2009



Lower prices of Alaska pollack reported

The groundfish market continues to be well supplied and prices are declining. More availability of Alaska pollack from Russia has created a downward spiral for groundfish prices.
Demand is not expected to improve in coming months.



As far as the Alaska pollock fillet market in Europe is concerned, imports into Germany and France experienced a growth in 2008, by 7.5% (to 176 800 tonnes) and by 9% (to 41 500 tonnes) respectively. The increase in imports of this product in both the German and the French market was due to greater shipments from China, +14% to 89 700 tonnes in Germany and +17% to 21 700 tonnes in France.



The 18.5% reduction in the US Alaska pollock quota to 815 000 tonnes is forcing Europes
buyers (who are used to a high availability and relatively low price for frozen-at-sea pollock from the USA) to turn to other whitefish as alternatives, or buy double-frozen pollock from Russia and China (lower price and improved quality).

The alternatives considered are species such as cod, and farmed pangasius and tilapia which are traditionally more expensive than Alaska pollock. Pollock processors who are looking at switching species are showing a preference for double-frozen Pollock from China. Currently twice-frozen Pollock is fetching the same price as pangasius; therefore processors will oft for Pollock. The difference in price between the single- and double-frozen pollock is very high at the moment. If the economic situation recovers in 2010 and demand increases but the US pollock quota drops once again, there could be a severe supply problem. The supply situation may deteriorate further if predictions by Russia that Pollock will migrate from the US towards the colder waters along the Russian coast actually take place. This is a cause for concern for seafood companies. Since 1999, it is the lowest quota for USD (815 000 tonnes in 2009) and it is extremely difficult for other fish to fill this gap. On one hand the need to diversify is encouraging buyers and consumers to look at other species, on the other the consumers
interest in Alaska pollock cannot be satisfied.



High pollock prices in 2008 have caused sluggish sales in Japan and further deterioration of the seafood market is forecast under the impact of global economic recession. The rising wholesale prices of North American pollock have been caused by quota cutbacks. The rise in Alaska pollock prices occurred in December 2008 passing from 1.93 USD/lb to 2.00 USD/lb. Prices have remained stable since.

Alaskas
pollock fishery has begun the assessment process which is required in order to continue certification under the Marine Stewardship Councils sustainable seafood program.

The Gulf of Alaska Pollock fishery and the Bering sea and Aleutian islands pollock fishery, which together account for 100 % of the targeted catch for Alaska pollock, were first certified in February 2005. Each certificate is valid for five years in order to ensure that the fisheries continue to meet MSC standards. The assessment includes the status of the fish stock, the impact that the fishery has on the marine ecosystem, and the management system overseeing the fishery.

In last
A season, the import prices of US A season surimi surged by JY130-150 per kilo, rising by a further JY90-100 in the B season in the latter half of the year. These price hikes were due to pollock quota cutbacks in the U.S which pushed up prices of surimi from other countries as well as Japanese-produced surimi. The higher US prices stimulated producers in Japan and Asian countries to boost their surimi production. The pollock catch rate in the US A season (which opened on January 20) was 24% of the overall quota (as of February 14)

However, partly due to the increased supply of lower-grade products, the prices of surimi, mainly coming from Asian countries, declined sharply. As the prices of Asian surimi, including itoyori (golden threadfin bream) surimi, continue to fall, importers suggest that the prices of
A season surimi may not be set before May, the Golden Week holiday in Japan.



Higher surimi imports into France

In 2008 both the quantity and value of surimi imported into France increased significantly, while the countrys
production of surimi products more than doubled, reaching EUR 42.1 million (USD 53.1 million). While the demand for surimi on the world market is around
600 000 tonnes annually, supply is constantly shrinking, and traders expect it will not cover demand for 2009. The cut in Alaska pollock quota and the situation in Chile both contributed to reduced surimi raw material in 2008. The US is the largest market for French imports of surimi with 18 621 tonnes. Other important markets are Viet Nam, Chile, Thailand and Argentina.

Alaska pollack market is expected to continue sluggish

All major indicators go for a depressed Alaska pollack market also in coming months. Supply should be sufficient, while demand worldwide is expected to stay rather low. The main importing countries will show lower imports, while alternative species such as pangasius and tilapia will go strong.



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