Snow crab leg clusters from Canada

Canadian snow crab sellers see demand hold at record-high prices

By Tom Seaman — Undercurrent News

The top executives of Royal Greenland and Ocean Choice International (OCI) noted demand has remained strong for Canadian snow crab in 2017, despite record-high prices caused by reduced supply from the Newfoundland and Labrador fishery.

In April, Canada’s Department of Fisheries and Oceans (DFO) cut the 2017/2018 total allowable catch (TAC) for the Newfoundland and Labrador fishery 22% year-on-year — to 35,419 metric tons — causing prices to increase to record levels of over $8 per pound (for 5-8 ounce size crab) during the season, sources said. The Newfoundland season started on April 6 and finished between May and August, depending on the area.

Increased prices have offset the reduced volumes this year, according to Martin Sullivan, CEO of OCI, a fishing and processing firm that supplies snow crab, lobster, shrimp and a range of groundfish species.

“Fishermen got 30% higher revenue this year than last, even though the quota was down 20%,” he told Undercurrent News, during the recent 2017 Groundfish Forum in Lisbon, Portugal.

“We felt there was strong demand this year, in the US and Japan, and the market would stabilize for most of the volume,” said Blaine Sullivan, chief operating officer  of  OCI.

Mikael Thinghuus, CEO of Royal Greenland, which has expanded into Canadian snow crab and other shellfish with its deal for Quin-Sea Fisheries, agreed with the Sullivan brothers.

“Snow crab sales are good. It’s such a fine product. I think, sometimes in this world, you stumble across things that are simply too expensive for what it’s worth — snow crab is not one of those. Maybe not this year, not next year, but looking further ahead, it’s one of those products that could be fundamentally priced higher,” he told Undercurrent

“The market has remained stable, even at the higher prices. But, the biggest consumption is happening in the winter. It’s really after Christmas that we will know if it’s a trend or an anomaly,” said Blaine.

However, the increase in prices seen this year “has been surprising”, Martin told Undercurrent.

The Sullivans declined to comment on specific prices, however.

According to industry sources, who wished to remain unnamed, prices peaked after the Alaskan season, moved down into the $7/lb range (for 5-8 ounce size crab) for the initial big volumes from Newfoundland and the Gulf, and then moved up over $8/lb.

“It is hanging at around $8 now. The Alaskans started with an empty market and a smaller volume, so their average was higher,” one source told Undercurrent.

Blaine, however, added that the increase has only come on a small proportion of volumes, after the main deals with Japanese and US buyers were made earlier in the year.

“It [the price] has increased on small volumes. People patiently hold some [crab] and then push the prices up. A lot of the big commitments are made in the spring, with the Japanese importers taking a position and also US retailers. So, most of the positions are taken between April and July,” he said.

High prices look to be the norm, with TACs set to come down further.

“The trend in Canada is that the crab resource is going to continue to decline,” said Martin.

A bright spot for this year was in the Gulf of St. Lawrence, where the DFO more than doubled the TAC, to 43,822t. The gulf season opened in mid-April, with area 12, the main fishing grounds, supposed to close on July 28. However, the DFO shut the fishery on July 20, due to right whale deaths.

“I suspect that the price would not have dipped as far, recovered quicker, and to a higher point, if not for the big increase in the gulf,” one source told Undercurrent.

It remains to be seen what level the gulf will be at in 2018, however.

According to an email note from Ken Salzinger — owner of seafood brokerage firm KenMar Sales and Marketing — Canada’s DFO is currently conducting a survey of crab in Newfoundland and Labrador, where crab represented nearly 39% of 2016 landed value.

“While this year saw an increase in landings out of the gulf, will this continue into 2018? Moreover, with prices reaching record highs, how much more of an increase can the market absorb?” he wrote.

Salzinger is less bullish on the US market taking higher prices, however. He also said Norway is unlikely to be able to offset the increased demand, if Canadian supply continues to go down, as seems likely. 

When the amount of large-sized crab out of Canada was down many buyers relied on product originating out of Norway, he said. “Still and all, I don’t believe Norway is ready for the demand they can encounter should Canada’s production continue to decline, and we may see alternatives to this crustacean, especially among buffet restaurants and casinos,” wrote Salzinger.

As Undercurrent reported recently, Norway looks very unlikely to even fulfill its 2017 quota of 4,000t. Snow crab had been a promising new species here, until Russia blocked its access to the most fruitful fishery.

In Alaska, the trend on volumes is also negative. At the start of October, the Alaska Department of Fish and Game and National Marine Fisheries Service announced a TAC of 18.961 million pounds for the Bering Sea district fishery, a decrease of 12% y-o-y. For the 2016/2017 season, the TAC had been cut in half to 21.57m pounds. The season opened on Oct. 15 and runs until May 31, 2018.

CETA opening

The main markets for snow crab, at the moment, are North America and Asia, mainly Japan.

However, the Comprehensive Economic and Trade Agreement (Ceta) between Canada and the European Union could shift this, sellers hope. Under Ceta, tariffs on snow crab from Canada into the EU have gone to zero, from 8%. The date of introduction was Sept. 1, 2017.

OCI’s CEO said he hopes the zero tariffs will mean a third market can be added for Canadian sellers, even at the high prices.

“There have been two markets, Japan and the US. And it’s an item that people in Europe eat from the shell, it’s quite common, in Spain and southern Europe,” he said.

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