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See stable Atlantic groundfish prices, but 1989 supply line could tighten up.

See Stable Atlantic Groundfish Prices, But 1989 Supply Line Could Tighten Up Landings could drop by up to 180,000 metric tons, says Canadian Trade Commissioner. But diversion of raw materials from ailing saltfish industry should fill frozen gap.

Price stability for cod blocks and fillets is likely for the remainder of the year. However, very noticeable shortages of Atlantic whitefish species are likely as allocations are being cut across the board in Canada, Norway and Ireland. Influenced by factors including tightness of supply, depressed demand and increased alternative species volume from the North Pacific, buyers can expect to pay $1.60-$2.40 per pound for cod fillets, and $1.50 per pound for blocks. Prices could go higher before summer, and again in the fall...but not by much.

That is how Canadian Consul and Trade Commissioner Nilo Cachero sees things. Addressing delegates attending the recent Boston Seafood Show, he minimized the overall impact of a labor strike against offshore fishing operations in Canada:

"It has slowed down production, which in effect has put in a quota reduction. Up to now it's a blessing in disguise, as it has pared down inventories."

Indeed, weak buying interest resulted in a pile-up of cod cold storage holdings as prices fell during much of last year. While lower production brought some firmness to the market, the fact remained that close to 50 million pounds of cod fillets and blocks were warehoused in the United States alone at the beginning of 1989.

The rate that value-added processors will pay for redfish and turbot should also be relatively stable. "Turbot will be a very consistently priced product (amid) a lot of confusion," said Cachero. He noted that frozen varieties should fetch $1.70 to $1.80 per pound.

The commissioner advised that fluctuating exchange rates will likely impact Atlantic groundfish prices more than any other single factor in the near future. A weak U.S. dollar, for example, could trigger price hikes well beyond what shortages would normally command. "The tendency in Europe may be to favor their own producers and the Scandinavians," said Cachero. "I predict restrictions on supplies into the U.S. and Canada, as well as on North American products going into Europe."

A brief history lesson about the impact of currency shifts on determining the price of cod items -- particularly blocks -- illustrates the dilemma faced by producers and forward buyers alike. In early 1986 German buyers were paying DM 3.15 a pound for blocks, while those in the U.S. paid $1.35. When shortages developed in late 1987, the Germans "bid up" the price to only DM 3.25. Meanwhile, the greenback had weakened to the point where one mark was then worth 60 cents compared to 40 cents in early 1986. So, for U.S. buyers to successfully bid for blocks they had to offer $2.00 per pound -- which was exactly equivalent to DM 3.25 at that time.

During 1989 cod prices are apt to rise above $1.60 a pound only if U.S. currency falters to the point of being worth 50 to 55 cents per mark, or $1.80 to $1.90 per British pound.

Commissioner Cachero touched upon the new free trade agreement reached between Washington and Ottawa, as well as plans in the European Economic Community to form a single market after 1992: "The trend toward trading blocks should mean more efficiencies and better maintenance of home markets."

Specifically addressing the evolving U.S.-Canada relationship, he commented: "In the fish business products moving south have been tariff-free anyway. But now there's new thinking and more investments from both sides of the border. Before, just the big companies visited each other. Now the mid-size and smaller ones are meeting too."

Cachero offered detailed background information and forecasts on the major Atlantic groundfish species including cod, haddock, pollock, flounder, redfish and turbot. A review of his remarks follows.


On the average, about 425 million pounds of cod products are consumed annually in the U.S. Such volume is equal to about 45% of the combined cod production in Canada, Iceland, Norway, Denmark and the New England states.

This year's overall harvest could be off by as much as 180,000 metric tons of landed weight -- plummeting from about 1,235,000 tons to 1,055,000 tons. Such a major decline could translate to about 55 million fewer pounds of products that would normally be available to the U.S. However, a glut on the salt fish market could see raw materials diverted away from that segment. If so, the supplies will go into frozen fresh cod production, thus offsetting low landings. That being the case, a drop of only 20 to 30 million pounds (or less than 10%) is anticipated.

Commissioner Cachero offered a few words of advice to cod buyers looking to time their purchases right, price-wise: "Watch the peaks and valleys of early summer and early fall fishery seasons. Look especially where they move in late May."


The average annual imports of haddock products into the U.S. is equivalent to about 100,000 metric tons of landed weight, accounting for some 60% of the combined yearly harvests of Canada, Iceland, Norway and Denmark. The market is broken out as follows: blocks, 20 million pounds; frozen fillets, 40 million pounds; fresh fillets, 8 million pounds; fresh whole/dressed fish, 30 million pounds.

The combined harvests of the four nations listed above could decline to about 140,000 tons this year from about 165,000 tons in 1988. The shortfall is apt to be most pronounced in Canada and Norway. Hence supply of frozen and fresh haddock is expected to be extremely tight.

The bottom line is that buyers can expect to see prices advance for all products. The steepest increases will probably be felt in the fresh sector, however, since local New England harvests will likely decline at the same rate in 1989 as in 1988.

Atlantic Pollock

Prices for frozen Atlantic pollock may stabilize, with fresh pollock expected to cost more. Landings will probably be down in Canada and New England, while greater catches are forecast in Iceland, Norway and perhaps Denmark. The combined harvest could rise from about 280,000 tons last year to 300,000 tons in 1989.

Upwards of 90% of the tonnage will be sold in Europe, largely in frozen and fresh form or for salt fish processing. The remainder will go to the U.S.

Atlantic Flounder/Sole

Between 60 and 70 million pounds of these products are consumed annually in the U.S., with raw materials coming mostly from New England and Canada. Supply cutbacks in 1989 -- perhaps by as much as 20% -- are expected to be hardfelt. North American landings could slide from an estimate of 100,000 tons in 1988 to some 80,000 tons in 1989. Price pressure will be strongest for these species in both frozen and fresh sectors.


Redfish landings are expected to be stable in Norway, down in Iceland, but up in Canada. These countries provide the 55 million or so pounds of fresh and frozen redfish products imported by the U.S., which accounts for about 40% of their combined production.

Total redfish supplies will be up in 1989. In Canada stocks are healthy relative to the other traditional species which should stimulate fishing efforts. Prices will likely be stable, not only because of good resources but also because the alternative Japanese market appears to be stocked well enough to handle demand for a good part of the year.


The problem with turbot is not resource availability, but rather marketing. Landings could suffer in Iceland, but Canada is capable of turning out more than twice the recent annual average of about 25,000 tons. Pricing for this species is somewhat inconsistent. Much depends on product presentation and market niche. During most of 1989 turbot should be very competitive compared with most other North Atlantic products.

All things considered, Commissioner Cachero concluded that the shift from traditional species to non-traditional fish will be very significant this year. The degree of substitution will depend on relative prices, market acceptance and profitability.

"Total seafood consumption showed some weakness in 1988, which could also be the case in 1989," said the Canadian official. "The weakness was felt in the groundfish market as well, although its current (U.S.) market share of 34% could be maintained. However, this is possible only with a shift in species mix."

PHOTO : Nilo Cachero, Canadian Consul and Trade Commissioner, addressing a seminar on pricing and

PHOTO : supplies at the Boston Seafood Show.
COPYRIGHT 1989 E.W. Williams Publications, Inc.
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Title Annotation:QFFI's Global Seafood Magazine
Publication:Quick Frozen Foods International
Date:Apr 1, 1989
Previous Article:40% of wild Canadian Pacific Salmon frozen and going to markets in EEC, Japan and US.
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