Japan Cuts Purchases and Prices Spike 30 Per Cent
Canadian snow crab prices are now 30 per cent higher than last year, as the Newfoundland season is done, with the exception of a couple of fishing areas outside of 200 miles.
The Department of Fisheries and Oceans (DFO) reported that 37,958 tonnes have been landed, or 89 per cent of the 42,650-tonne quota. However, nearly 3,000 tonnes of quota is in areas such as 3PS where the fishery has already closed, so total landings will be below 40,000 tonnes.
This is the lowest landing total since 1996.
Snow crab prices began rising in the U.S. market last fall and by the opening of the Alaskan season, which saw a 40 per cent quota cut, prices were the highest in three years. Prices have climbed steadily since then, for both Newfoundland and Gulf of St. Lawrence crab. In the U.S. spot market, crab is on offer at $6.85 to $6.95/pound for 5-8 brine bulk sections. Alaska crab is not available.
This disrupted the usual Japanese buying patterns, in that a single market price was never established.
Last year the Japanese bought at $4.65 to $4.75/pound. This year Japanese buyers had hoped to see only a modest increase, expecting to pay in the $5.25-5.45/pound range, below the price they paid for Alaska crab which was $5.90/pound.
But although some initial contracts were signed at that level, prices rapidly escalated as the Newfoundland packers realized how short the market was. In a few weeks, prices for Canadian crab had risen to as high as $6.50/pound. The result is that many Japanese importers have different average costs, depending on when they made their purchases.
This shortage has meant that the overall crab supply in Japan from Newfoundland will be cut to 6,000 tonnes or less. Traders estimate that 3,000 to 3,500 tonnes of this is brine boiled crab, primarily used for extracting crabmeat and the remaining 2,000 to 2,500 tonnes is being shipped as raw frozen crab.
This is the lowest total from Newfoundland since at least 2002, when 9,760 tonnes were sent to Japan/China.
Total shipments from Alaska have dropped 20 per cent to 30 per cent year on year, according to traders, to 3,500 to 4,000 tonnes.
From the Gulf of St. Lawrence, whole crab are the major product form and are only expected to drop about 20 per cent, but sections are expected to be down 30 per cent to 40 per cent in terms of volume. Around 2,000 tonnes of finished product are expected from the Gulf, of which 50 per cent or more should be whole crab. The Gulf is the only area not reporting a substantial fall in landings.
In summary, the 40 per cent cut in Alaska, the roughly 15 per cent cut in catches in Newfoundland and a Gulf catch that only changed slightly, from 18,299 metric tonnes to 19,360 metric tonnes, has meant that the overall amount of crab available compared to last year from North America has decreased by 12,000 tonnes in Alaska and 5,000 to 6,000 tonnes in Canada.
With improving U.S. restaurant sales and good retail crab sales during the first half of this year, there was very strong competition between U.S. and Japanese buyers for the Canadian production. The result has been this spike in prices, and the lowest level of crab shipments to Japan in 14 years.
Despite the strengthening of the Yen against the U.S. dollar since last fall, the currency change has not been enough to offset the price increases faced by Japanese importers. As a result, crab prices in Japan will be higher for the holiday season and giving the shortfall in supply, they potentially could be at record levels.
The Newfoundland crab outlook is not expected to improve in the coming years, as there is a documented regime shift occurring in the western North Atlantic which is favoring species like cod that thrive in slightly warmer waters and discouraging species like snow crab and shrimp which thrive in cold waters.
The shrimp decline has been dramatic and highly visible, because shrimp are very short-lived and their reproductive success is immediately evident within a year or two. But snow crab take eight years to reach market size and as a result the fishery is largely based on crab that survived from their larval stages eight years ago. Conditions have gotten less favorable, which suggests that crab stocks are not going to rebound under the current ocean conditions off Newfoundland.
This article was republished with permission of John Sackton and seafood.com.
