Groundfish - November 2010

Supply was very good for Alaska pollock from Russia, but also for cod from the Barents Sea, a noteworthy return for a well managed species. In 2010, the new EU regulations attempting to curb IUU fishing created some supply difficulties for the groundfish market as not all the main supplying countries were immediately able to comply with the new regulations. Russia was one of these but has now been able to supply the EU with the list of competent authorities for IUU catch certification and is therefore once again able to export to the EU without delays. China also had some challenges, as processors were not aware of the documentation necessary to comply with the new EU regulation. In fact, reprocessors also need to provide evidence of the legitimacy of the original catch. Argentine and Chilean groundfish products were on offer at very low prices in the first months of 2010 and these were in competition with Alaska pollock coming from China. The South American countries were well prepared to comply with the new EU regulation and managed to provide all the necessary paper work well in time for the end of December 2009 deadline.

In the UK, the main groundfish market in Europe, the increased supply of pangasius from Viet Nam has had a marked effect on the market. Demand for this species grew in 2009 in spite of the adverse economic situation, and imports of frozen pangasius fillets by the UK market rose by 60 per cent, even though the quantity (1 000 tonnes) is still quite limited. Increasing quantities of pangasius are used in traditional fish and chips restaurants, as this fish is available at very competitive prices and works well in the frying process. In contrast, sales of cod in the UK fell by 17 per cent over the past year and plaice by 13 per cent. However, sales of haddock have increased by 2 per cent. At present price is the main factor in groundfish sales in the UK market. Russia is currently the main provider of Alaska pollock to the European market. This country reported abundant groundfish catches in the first half of the year. In fact in the first five months of 2010, Russia caught 1 million tonnes of Alaska pollock, a 25 per cent increase compared with the same period of 2009. McDonald’s Europe is using haddock to replace Alaska pollock as one of the key raw materials for its Filet-0-Fish. With the 18.5 per cent cut in the US Alaska pollock quota to 815 000 tonnes at the start of this year, McDonald’s made a decision to reduce the quantities of pollock used in Europe because of the species’ importance to its US operation, as a part of their sustainable sourcing policy.

As far as surimi is concerned, production is slow with a limited supply of raw material supply and with the USD-EUR exchange rate in favour of the dollar. This situation has resulted in a grim market situation for frozen products, although prices are stable, despite the low supply rate to the market. On the one hand Russia is able to export to the EU again, but on the other demand for groundfish in Europe is very low at the moment (it has been declining since the beginning of the year), and supply is more than sufficient. This situation will probably lead to decreasing prices. In March, the earthquake in Chile and the strength of the US dollar affected seafood purchases in Europe. Lower quantities of hake from Chile were available, while other Latin American countries are rerouting supplies to the US market. This resulted in higher prices in Europe. However, as mentioned earlier, demand is now very slow and consumption in Europe has been declining since the beginning of the year. The producers of value added groundfish products in Germany and the UK are focusing on Alaska pollock supply. Taking an overall look at the groundfish market, the USA shows stable imports for cod, and Alaska pollock prices tending downwards while hake fillets are moving upwards. An overview of the EU market shows Alaska pollock imports and prices declining while cod and hake imports are increasing. Earlier in the year cod prices declined and hake remained stable but both picked up in June.

Summer months are generally not a good sales period for groundfish species in Europe, thus the overall downward trend in prices is unlikely to improve. Much the same is true for the US market. Only in September/October will some changes to the present slow market situation be seen. Generally winter months are more positive for groundfish demand. Groundfish catches are expected to increase on a worldwide level, as a result of good resource recoveries in many fishing areas.