Small Pelagics: January 2013 Market Report

The herring season looks promising but the dispute over mackerel quotas is still adding uncertainty to supply.

Mackerel

The mackerel war between Iceland and the Faroe Islands on the one side and the EU and Norway on the other is continuing. At the end of September 2012, the EU decided to impose sanctions on Iceland and the Faroes for overfishing mackerel, but the Ministerial Council could not agree on how to implement this decision. Meanwhile, ICES recommended further reductions in overall catch. Denmark is now involved as well, as the Faroes is in fact an autonomous region of Denmark. The dispute is not expected to end soon.

Prices for frozen mackerel were relatively high until mid-summer, but then dropped dramatically in July and August. Iceland and the Faroes supplied 300 000 tonnes of additional mackerel into the market, contributing to the downward pressure on prices. Norwegian exports of mackerel during the first six months of 2012 increased by 28%, to 78 400 tonnes. The average export price per kg fell by 6.7%.

The most important markets for Norwegian mackerel were China, Russia and Japan. During the first half of the year, China and Russia increased their imports from Norway compared with the same period in 2011. However, during the third quarter this changed. China imported considerably less frozen Norwegian mackerel than during the first three quarters of 2011, while Russian imports increased. Meanwhile, German frozen mackerel imports during the first half of the year fell from 15 200 tonnes in 2011 to 13 800 tonnes in 2012. The main suppliers were the UK, Netherlands and Ireland

Japan’s imports of frozen Norwegian mackerel dropped by over 52% during the first three quarters, probably as a result of good domestic landings earlier in the year. Japan has been a very important market for Norwegian mackerel, both because of the high volumes that the Japanese have been buying and because they have focused on quality. These factors translate into higher prices. This year, however, negotiations between Norwegian exporters and Japanese buyers were somewhat protracted.

Herring

On the supply side, the outlook is bright. This year there were reports of very good catches in parts of the North Sea. The quality and size of the herring were also good. Record quotas have been set for the North Sea, and the EU has proposed significantly higher herring quotas for the Baltic Sea. However, Norwegian researchers have warned that herring stocks may be facing a collapse because of the rapid growth of mackerel stocks. The two species compete for food, and herring may lose in this competition.

Norwegian exports of frozen herring were stable in the first half of 2012 compared with 2011. However, export volumes declined in the third quarter. The export volume during the first nine months of the year fell by 30%, but prices were up considerably.

Over the past decade, there has been growing demand for frozen herring and herring products. At the present time, the trend seems to be for increasing demand for products like matjes herring, a well-known and loved product in the Netherlands. This may open a new market segment for herring, one that allows higher prices for premium products.

The largest markets for frozen Norwegian herring are Russia, Ukraine and the Netherlands. Practically all the traditional markets for Norwegian herring have shown declines in imports over the past few years, with the exceptions of Russia, Lithuania and Poland. Russia has emerged as the most important market for Norwegian herring, in part because Russia joined the WTO on 22 August 2012 and more predictable trade conditions are foreseen.

In other markets, French imports were slightly down during the first half of 2012, and there were some major shifts among the suppliers. Iceland lost market share, while Norway gained. The Japanese market looked as if it would be stable for a while, but during the first half of this year, herring imports declined by 25%. The market for herring fillets appears to be showing healthy growth, with Germany the largest importer in Europe.

Anchovies and sardines

The anchovy fishery in the Gulf of Cadiz was closed twice in August. It was first closed on the 15th, but reopened a few days later as Spain received 500 tonnes of Portugal’s quota. It was closed again on 31 August in order to ensure a “responsible” fishery.

The ICES anchovy quota has been reduced from 29 000 tonnes in 2012 to 20 700 tonnes for the next season. The quota is divided between Spain and France. This means that a smaller quantity of anchovies will be available, and this will add to the tight supply situation.

In Peru, landings have been dramatically down in 2012. During the first five months of the year, landings of anchovies declined by 54.4% to just 1.2 million tonnes. As a result of the tight supply situation, prices for anchovies have risen sharply in recent months. However, the start of the second season of 2012, which began on 7 August and ends on 31 December, was much better. The TAC for this season is set at 307 000 tonnes.

The canned sardine market seems to be improving in Europe. Imports into the most important markets are up. The two largest importers, France and the UK, both showed increasing imports in 2012.

The USA is also an important market for canned sardines, and actually imports about as much as the EU every year. In the period from 2009 to 2011, US imports of canned sardines grew steadily, but then dropped dramatically in 2012. The largest suppliers of canned sardines to the USA are Thailand, Ecuador and Poland.

Outlook

Mackerel supplies are uncertain as the dispute between Iceland, the Faroes and the EU drags on and quotas may be reduced. This could have a positive effect on prices, which have been down in the past six months. For herring, the supply situation is bright, and larger landings are expected from the North Sea. Landings of anchovies and sardines have been lower, but the outlook is somewhat better and the supply situation may improve. It is doubtful, however, whether the high anchovy prices at the moment will be much reduced.

Source: FAO Globefish