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How fluctuations in exchange rates affect seafood trading scene in Japan.

How Fluctuations in Exchange Rates Affect Seafood Trading Scene in Japan

While the yen has stabilized against the dollar recently, exporters to the Japanese market are not likely to benefit from any further strengthening this year. As far as M. Yoshioka can see, the cost of seafoods "will inevitably increase because of the weakening yen." And if history is a guide, that does not bode well for increased sales of fishery products.

The managing director of Mitsui and president of the Japan Marine Products Importer Association told delegates attending the Seafood 90 Japan Conference in Kyoto that the dollar will likely trade in the 140 [Yen] to 155 [Yen] range this year. "I am afraid that the yen won't strengthen to the level you desire, and that you will not see the rate of 130 [Yen]," he advised foreign suppliers who had expressed concern about squeezed profit margins.

Yoshioka's address focused on the effects of currency fluctuations on the Japanese seafood trade over the past decade. Noting that overall imports have increased 2.6 times since 1980, he pointed out that seafood purchases from abroad have multiplied by an even greater factor of 3.5, reaching a value of $10 billion two years ago. Volume has risen from 1 million metric tons to 2.4 million during the last 10 years.

The growth of imports is not only influenced by the impact of supply and demand on price, but also by shifts in foreign exchange values - particularly as regards the yen and dollar. With the yen's remarkable appreciation since the autumn of 1985, imports of seafood and other products gained rapidly.

But last year the movement of the yen dropped to a lower range, reflecting a trend that has continued until today. The highest rate of the Japanese currency against the dollar in 1988 was 120.45 [Yen] reached on Jan. 4, while the lowest point was 136.80 on Sept. 1. Thus the average value two years ago was 128.19.

Interestingly, Jan 4 again heralded the highest yen rate in 1989 when the currency hit 123.80 [Yen] to the dollar. The low level of 138.01 was 8% below that of 1988.

"The import of seafood has also decreased by about 8%," said Yoshioka. And while other factors - such as the growing appeal of meat and poultry among consumers - were also at play, conditions in the foreign exchange market were cited as the chief reason for the downtick.

The Mitsui managing director made comparisons of domestic production and import volume of major fishery products as follows:

* Growth in domestic output and imports saw the total supply of salmon almost double from 150,000 metric tons to 290,000.

* Spurred by a great rise in imports, shrimp tonnage jumped 160% to reach 320,000. Domestic production during the 1978-88 period remained unchanged at about 50,000 metric tons annually.

* The total supply of tuna fish for consumption in Japan remained relatively flat at 910,000 metric tons. Decreasing domestic landings were made up for by foreign catches.

* Bottom fish and surimi products sourced from the North Pacific rose marginally from 775,000 metric tons to 811,000. During the ten-year period Japanese catches dropped significantly from just over 600,000MT to under 400,000. Meanwhile, imported fish filled the gap, climbing from under 200,000MT in 1979 to almost 450,000 in 1988.

Yoshioka cited attractive pricing as the main reason salmon and shrimp consumption has risen appreciably while that of other fish has gone up only slightly. During the last five years, wholesale shrimp prices dropped some 35%, going from 2,050 [Yen] per kilo to 1,320 [Yen]. Retail savings of at least 20% was reportedly passed on to consumers.

"However," Yoshioka commented, "a man's stomach, unlike a balloon, cannot stretch very far. And now the capacity seems to have been reached."

Fueled by a strong yen a few years ago, importers boosted inventories to very high levels. Stocks of shrimp and salmon in cold storage at the end of last year were equivalent to four months of consumption volume. And buoyed by a big domestic squid catch, imports pushed inventories of that seafood to a level that could feed the population for six months.

Naturally, prices began to fall. To check this, the Mitsui chief executive urged suppliers and importers to pay more attention to market conditions. Not doing so in the past has "resulted in the far too excessive stocks at the end of the 1980s," he said.

As for future prospects, Yoshioka summed up: ". . . If import volume is reasonable with respect to demand, and the quality is good, Japan will remain a very stable and important market for supplying countries."
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Publication:Quick Frozen Foods International
Date:Jul 1, 1990
Words:787
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