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Shellfish Updates

Shrimp

 Ask anyone in the shrimp business how their year has been and you get the same string of adjectives: horrible, horrendous, terrible. But a year that was already the worst in recent memory got much worse after Sept. 11.

Since the summer of 2000, shrimp prices have headed one way — downhill. Since August of 2000, when white spot was ravaging the Ecuador shrimp industry, the price of 36/40 shell-on white shrimp has gone from $6.75 a pound to just $3.70 a pound this October. In the month after the World Trade Center and Pentagon terrorist attacks, prices plummeted 9 percent, as importers and buyers bailed on previous commitments.

The situation with black tigers was just as bad. Last August, 21/25 shell-on tigers were selling to distributors for about $7.70 a pound. Compare that to the asking price early this October of $4.85 a pound. In the case of cooked 41/50 tigers, the price has sunk from $7 a pound to $4.70.

For anybody who has been in the unfortunate position of having to hold shrimp inventory — i.e. processors and importers — it’s been a long painful slide.

“Normally after a few months — maybe six months at the tops — things turn around and you can make the money you lost back when prices start to rise,” explains one of the largest shrimp importers in Los Angeles. “But the past 15 months has been totally unprecedented. It’s been a relentless bear market for shrimp. It’s unbelievable.”

As economies around the world slow, farmed shrimp production is rising, a proven recipe for plummeting prices.

Take Thailand, the world’s largest single producer of farmed shrimp. After production from Ecuador hit the skids, the Thais jumped on the opportunity and quickly ramped up production, from 250,000 metric tons in 1999 to an estimated 320,000 metric tons this year.

At the same time as the Thais were trying to cash in on Ecuador’s misfortunes, Vietnam was getting ready to reap the fruits of an aggressive effort to develop its shrimp farming industry, with the eventual goal of trying to tackle Thailand for the top shrimp spot. According to one report, Vietnam’s shrimp industry plans to produce more than 350,000 metric tons of farmed shrimp, most of which will be tigers, by the end of this decade.

The surge in shrimp production from Vietnam and Thailand has come at the same time as demand from Japan and Europe has cooled. In the case of Japan, shrimp imports for the first six months of 2001 fell 7 percent to 104,000 metric tons, according to import statistics from the country’s Ministry of Finance. The slump in Japanese shrimp imports is attributable directly to the moribund economy.

In Japan, shrimp is seen as a premium seafood product most often consumed when dining out. With consumer confidence at very low levels, Japanese consumers are not eating out as frequently.

In Europe, the problem is higher tariffs. In 1998, when the European Union removed Thailand’s preferential tariffs, Thai shrimp exports to the E.U. were cut in half. Next year Vietnam will suffer a similar fate, as its preferential tariff rate will be increased substantially. Once that happens, “it will be a tall order for Vietnamese producers to maintain market share in Europe,” says one Vietnamese trade official.

The bad news for Thai and Vietnamese shrimp farmers is good news for shrimp farmers from India, Indonesia and Myanmar who will still enjoy low E.U. tariff rates and hence will have a significant competitive edge.

With exports to Japan and the E.U. slumping, Thai and Vietnamese producers have been forced to try and move their extra production to the U.S. market, which, of course, now has problems of its own.

Despite the slowing economy, shrimp continued to pour into the United States at record levels even before the September terrorist attacks. Through the first seven months of 2001, total U.S. shrimp imports increased another 8 percent to 182,500 metric tons.

Of that total, Thailand remained firmly in the top spot with imports of 62,000 metric tons, a relatively modest increase of 2 percent over last year. Imports from Vietnam, however, continued to surge from 6,750 metric tons in the first seven months of 2000 to 12,500 metric tons in 2001, an increase of 85 percent. Given the country’s current development policy, it is likely that Vietnam could surpass Ecuador as the second leading shrimp exporter to the U.S. market in 2002.

Supplies of white shrimp from Ecuador have rebounded, al-though the weakened shrimp-farming industry there continues to struggle with the ravages of white spot.

Through the first seven months of 2001, U.S. shrimp imports from Ecuador were up approximately 50 percent to approximately 18,500 metric tons. However, Ecuador producers say that total production is not up as much as U.S. exports due to the fact that European demand for head-on shrimp has weakened.

Few people expect Ecuador’s shrimp production to return to the pre-white spot days, when annual production exceeded 100,000 metric tons, anytime soon.

“They still have water quality issues that will make white spot something that they’re going to have to live with,” says one large U.S. importer.

Once white spot gets introduced to an area, it is carried by other animals such as crabs and it becomes part of the environment.

Making matters worse for Ecuadoran shrimp producers are the current low prices. The combination of low production and low prices is driving a lot of farmers out of business and a lot of ponds are not being stocked.

It was just a few years ago that Ecuador packers were having considerable success selling their shrimp to China. Now, in one of the many ironies of the seafood business, some Ecuador packers are having white shrimp packed in China for export to the United States.

Farmers in southern China have begun producing significant quantities of Penaeus vannamei, the Pacific white shrimp native to South America. Although much of the

Chinese production is sold live to local markets at a premium price, Chinese shrimp producers are freezing more and more of their production as they start to saturate the domestic live market.

The growth in Chinese white shrimp production has led to a sharp increase in U.S. shrimp imports from China, from less than 9,000 metric tons in 1999 to more than 18,000 metric tons in 2000. But that growth has slowed this year, as Chinese imports have increased only slightly to 9,500 metric tons through the first seven months of the year compared to 9,100 metric tons last year.   

Closer to home, U.S. shrimp production from the Gulf of Mexico was down from last year, which was the best season in more than five years. Through August, landings of headless shrimp were about 44,000 metric tons, down 11 percent from last year’s haul of 49,000 metric tons. As usual, Louisiana was the leading producer with landings through August of 21,500 metric tons, followed by Texas with landings of 12,500 metric tons.

As expected, Gulf fishermen were getting less money for their shrimp this year, especially for small sizes. The ex-vessel price of 36/40 headless shrimp was about $3.10 a pound

this summer, compared to $4.40 last year. Prices for larger sizes were holding up much better. The ex-vessel price of 21/25 headless shrimp landed in Florida, for example, was $6.25 a pound, the same as last year. The price of 15/20s, though, was down about 20 cents.

Most shrimp suppliers are counting on the retail industry to jump on the low prices and help boost the shrimp industry out of its collective funk by promoting shrimp aggressively this holiday season. And they may have some reason for optimism. One major importer says he has booked a lot more fourth quarter business from supermarkets than he did last year.  

On the other hand, prospects for foodservice sales are not nearly as bright. Most

distributors say their sales in the month after the terrorist attacks were down 20 to 30 percent, although sales in resort areas were down substantially more.

The consensus among shrimp importers is that supplies will probably start to tighten in the first quarter of 2002 and prices will finally start to rebound. With prices so low lately, some farmers in Southeast Asia have opted not to stock ponds and production in 2002 could actually decrease from this year’s record levels. If that’s the case, shrimp prices could actually rise for the first time in a long, long time.

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Crab

Landings of blue, king and Dungeness show decline

The news just keeps getting worse in the blue crab business. This summer, catches were down sharply from last summer’s abysmal levels. In Virginia, for example, crabbers landed just 7.2 million pounds from April 1 to July 31, a whopping 48 percent less than the year before.

Watermen in Maryland weren’t faring much better. Between April and the end of August, 12 million pounds of blue crabs were landed, about a third less than last year and well below the 20 million pounds landed in a typical year.

While fishing was pretty poor, crabbers say the new regulations designed to cut harvests have done just that. In Virginia, for example, crabbers are now required to stay tied up on Wednesday in addition to the normal Sunday closure during the months of June, July and August. In Maryland, crabbers are limited to eight hours on the water, and the season closed at the end of October, a month early.

The new regulations, which were designed to cut Chesapeake Bay blue crab harvests by 15 percent over three years, were fought bitterly by watermen. In Maryland, one group sued the state government, although the suit was dropped in October.

Despite the fact that catches are down sharply, some Maryland crabbers maintain the bay “is booming and teeming with crabs,” although their argument to extend the season has fallen on deaf ears.

As recently as 1997, blue crab fishermen in Chesapeake Bay were landing close to 100 million pounds of blue crab a year, compared to about half that amount last year.

By the time the final numbers are added up this winter, the year’s harvest could be less than 30 million pounds, the smallest catch anyone can remember.

Landings in North Carolina, where fishermen landed almost 60 million pounds in 1999, have also been poor, and this year’s catch should be at least 30 percent below last year’s harvest of 40 million pounds.

The poor catches sent the price of a bushel of hardshell No. 1 Jimmies up to between $70 and $80 during much of the summer. Once demand from summer crab houses fell off, though, prices fell to $45 to $50 per bushel.

Some softshell prices, on the other hand, were actually down slightly, as more crabbers focused on the pricier softshells to make ends meet. In early June, shedding houses were selling fresh primes for $22 a dozen, jumbos for $28 and whales for $30, about $4 a dozen below the previous year’s levels.

Look for hard crabs to remain pricey for some time. This summer’s poor season on Chesapeake Bay could lead to even stiffer conservation measures and lower harvests for years to come.

At the same time that the U.S. blue crab industry is being squeezed and picking houses are going out of business left and right, crabmeat continues to pour in from Asia. At the end of July, crabmeat imports were 7,000 metric tons, up from 5,500 metric tons last year.

Almost all of the increase was due to the sudden appearance of China as a supplier. During the first seven months of last year, China shipped just 25 metric tons, versus 500 metric tons this year.

“China’s going to be a major player,” says one importer. “Their meat is not quite as good as product from Indonesia, but it’s $5 a pound less, and in something like a crab cake, you can’t tell the difference anyway.”

In October, jumbo lump prices to distributors were averaging between $15 and $18 a pound, f.o.b. East Coast, depending on origin, as imports kept a lid on prices. 

Up in Alaska, the crab fleet started fishing Oct. 15 when the Bristol Bay red king crab fishery opened. This season’s quota was reduced yet again, to just over 7 million pounds, a 14-percent decline from last year. Given the small quota and the fact that only 232 boats fished, the season lasted less than four days.

Although processors had been planning to pay less for crab than last year, strong demand from Japanese buyers forced them to pay fishermen $4.80 a pound — the same price  as last year.

Processors say they expect very little top-quality big crab to be available for U.S. buyers, as Japanese buyers stepped up to the plate with letters of credit  in hand.

The strong Japanese demand for king crab is a direct result of the sharp reduction in Russian catches, a situation that is not expected to improve. Through July, U.S. imports of Russian king crab were down another 20 percent, to 4,600 metric tons.

In spite of the decline in supply, king crab prices have softened slightly due to the slow economy. Since the beginning of the year, the price to distributors of 9/12 legs and claws slid almost a dollar a pound from $12.25 to $11.30, f.o.b. Seattle, by October.

Prices for smaller legs have held up better. The price of 21/24 red legs and claws, for example, was off only about a quarter at $7.90 a pound.

Although the volume is still very small, a lot more fresh red king crab came down from Dutch Harbor this season at prices that averaged about $11 a pound for ungraded sections, f.o.b. Seattle.

Some buyers have started to complain that the quality of the Russian king crab isn’t what it used to be. Along with the new quota auction system have come new players, some of whom have limited experience processing king crab.

In addition, the average size of the crab keeps shrinking, as Russian fishermen work the stocks hard (one scientist has called for a 50-percent reduction in future quotas to give the crabs a chance).

That has led one large steakhouse chain to switch from Russian crab to golden king crab from Alaska.  

While most of the red king crab from the Bristol Bay fishery was headed to Japan, there were adequate supplies of golden king crab, almost all of which comes down to markets in the Lower 48. The 2.7

million-pound quota for the eastern Aleutians was taken by mid-September, but fishermen still had a 3-million pound quota for the western Aleutians.

Whether they catch the whole quota in the far reaches of the Aleutians, though, will depend on the ex-vessel price.

Processors lowered the price to the boats to $3 after demand dropped off after the Sept. 11 terrorist attacks. At that level, it’s barely worth fishing.

The price of 21/24 golden legs and claws has held steady at $7.50 to $7.75 a pound all year, f.o.b. Seattle, but prices could soften 50 cents a pound or so by mid-December unless demand increases.

Most king crab buyers say they’re going to be cautious this holiday season. Supplies are down, but so is demand, and they see no reason to stock up. Look for prices to be fairly stable through early next year if demand remains reasonable.

Dungeness crab fishermen were tied up this October, hoping for the best when the main ocean season opens the first week in December, or as soon as the crabs are filled out.

Last season’s catches were down considerably, but the pain was mitigated by higher ex-vessel prices. Oregon landings, for example, were less than 8 million pounds this season, about half of the 2000 haul. Catches were also down in California and Washington.

Once it became apparent how poor fishing was, ex-vessel prices headed through the roof, driven by demand from the live market. After starting out at $1.60 a pound in December, prices to fishermen peaked at an unprecedented $4 a pound in May. But good summer catches in Alaska and British Columbia pushed boat prices down below $2 a pound. 

Dungeness meat prices to distributors, which had started at $15 a pound, jumped to almost $20 a pound  before falling back to $17 a pound by October, f.o.b. West Coast.

Fresh and frozen whole cooks, meanwhile, started out at $3 a pound and rose to almost $6 before falling back in October to $4 a pound, f.o.b. Seattle, for 1 1/2- to 2-pound crab.

Given the economic outlook, processors say they will be pretty cautious this December and are unlikely to raise ex-vessel prices above $1.50 a pound unless landings look like they will be down again like last year.

Stone crab fishing kicked off Oct. 15, and prices were averaging about $2 to $3 a pound less than last year.

Jumbo claws were selling to distributors for $12 a pound, f.o.b. Miami, while large claws were bringing $10 and medium claws were selling for $6. Stone crab should remain a relatively good buy through the winter until the season closes March 15.

Landings should be similar to those of the past few years, when Florida fishermen landed 2,500 metric tons of claws.  

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Clams

Frozen product from China will help stabilize the market

For most people in the clam business, 2001 was a pretty good year. In the surf clam fishery, one of the more lucrative clam fisheries in North America, quota holders were smiling after the harvest quota was bumped another 11 percent in 2001, to 2.8 million bushels.

When you add in the state quota from New Jersey, on a meat-weight basis, 2001 surf clam landings should be well above 35,000 metric tons, the highest tally in more than 10 years.

What makes surf clams — managed since 1990 under an individual quota system — so profitable is the fact that a handful of quota holders now control the fishery, which means they can fish very efficiently — and profitably.

Since the ITQ system was enacted, the size of the surf clam fleet has declined from more than 125 boats to fewer than 30, and at the same time landings have increased.

Fishing for surf clams has been profitable enough for some fishing companies to expand downstream and buy processing plants.

Despite the increased landings, the price of surf clam meats to distributors rose in 2001 to an average of $17 a gallon.

Look for surf clam prices to stay at their current levels, as the small number of quota holders will be careful not to flood the market and drive prices lower.

On other clam fronts, hard clam production on the East Coast has been good, especially in Rhode Island’s Narragansett Bay, where littlenecks littered the bottom. According to one producer, the clams looked so good “they almost sold themselves.”

Despite the good clamming, the dock price of littlenecks was as high as 23 cents apiece, while top necks were worth 18 cents. At the wholesale level, bushel prices ranged from $105 to $115 (f.o.b. New York).

Down in Florida, where fishermen were being paid 15 cents for littlenecks, clamming was better but still not back up to the peak levels of 1999.

On the West Coast, Manila production from Washington and British Columbia is expected to be up by about 5 percent in 2001, to 10 million pounds (live weight), as growers get more efficient.

“We’ve learned a lot in the last 10 years,” says the largest producer in Washington. Prices to distributors should remain in the $2.30- to $2.60-a-pound range, as producers report that market demand continues strong, especially from Chinese restaurants.

Look for more frozen, whole cooked clams from China. Through July, U.S. imports were up almost 60 percent to 416 metric tons. And there are a lot more clams where those came from.

Importers say Chinese clams, which are sold in 1-pound vacuum-packed sleeves for about $2.50 a pound, ex-importer, are increasingly popular with broadline distributors and non-seafood restaurants that don’t handle live product.  

“There’s no shrink, they’re sand-free, and there are no rotation issues,” says one importer. “They’re great for people who can’t handle the hassles of live product.”

Meanwhile, imports of live clams from Mexico’s Baja Peninsula, which reached almost 700 metric tons last year, have plummeted, as Mexico failed to renew its Memorandum of Understanding with the Food and Drug Administration. 

“It’s a shame because the waters were totally pristine,” says one importer.

“It was a bureaucratic blunder on their part.” 

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Crawfish

Imports from China continue to surge

into the United States, despite tariff on meats

After last year’s abysmal season, the Louisiana crawfish industry was optimistic that the 2001 season would be much, much better. After all, how could it get any worse?

Crawfish harvests in Louisiana plummeted from 6,000 metric tons in 1999 to just 178 metric tons in 2000. As recently as 1997, more than 10,000 metric tons of crawfish were harvested in a typical year.

Approximately 90 percent of the U.S. farmed and wild crawfish

production comes from Louisiana, where they are trapped in the wild and farmed as a rotating crop with rice. Crawfish are also farmed and harvested wild in other Southern states and in the Pacific Northwest.

Although the final numbers aren’t in, while 2001 was by no means a banner season, it was certainly a lot better than the year before and closer to more normal levels. And it could have been even better, argue crawfish fishermen, if the Army Corps of Engineers had let more water into the Mississippi River drainage in the spring.

Fortunately for Louisiana restaurateurs, who boil the mudbugs in spicy Cajun or Creole seasonings, there’s been Chinese crawfish. Lots of Chinese crawfish.

As a result of Chinese crawfish meats flooding the U.S. market and undercutting domestic product, the U.S. Department of Commerce slapped tariffs on Chinese crawfish meats in 1997.

But despite the tariff, demand is so strong that Chinese imports flowed in at record levels in 2001.

Through July, U.S. imports of Chinese tail meat soared from 167 metric tons in 2000 to more than 1,200 metric tons this year. At the same time, imports of whole cooked crawfish, which are not subject to dumping duties, have jumped from 350 metric tons to more than 750 metric tons.

Despite the lack of domestic production and a massive dumping duty that averages about 200 percent, Chinese crawfish is still a great buy. And exactly why?

“Nobody’s actually paying duty,” says one Chinese importer.

While some Chinese crawfish processors were hit with the stiff duty, others received either no duty or a very small duty. As a result, most of the Chinese companies that were slapped with dumping tariffs either export their tailmeat through a plant that has no tariff, or they import through a small dummy company in the United States that doesn’t pay the duty, explains the importer. “It’s a risky business, but some guys have been making very good money.”

Until this year. Although the actual declared value of Chinese crawfish tailmeat has averaged about $3 a pound, this October it was readily available from importers for $2.10 a pound, f.o.b.  West Coast, for 100 to 150 count meats, more than a dollar a pound below last year’s levels.

The record imports and a rebound in domestic production have sent prices plummeting as importers dump inventory. Frozen whole cooked crawfish, meanwhile, was selling early this fall for less than a $1 a pound for 16-22 count product. Look for good buys on crawfish to continue in 2002 as there’s still plenty of inventory left in China.  

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Oysters

Supply boost hasn’t weakened market for live halfshells

Although U.S. oyster harvests have been relatively flat for the past 10 years at between 13,000 and 15,000 metric tons (meat weight), some major changes are taking place in the industry.

Some of the biggest changes can be found in Louisiana and Texas, which typically produce about 80 percent of the U.S. harvest of Eastern oysters. Because concerns over Vibrio vulnificus have made it increasingly hard for Gulf producers to sell live oysters in the shell for raw consumption, more and more of the Gulf oyster harvest is being processed to eliminate

the bacteria.

Texas’ largest producer, for example, now sells almost all its production frozen on the halfshell. Another Gulf producer has developed a patented low-heat/cold-shock treatment that has opened up new markets with large foodservice accounts that had dropped live Gulf oysters.

The latest method to rid Gulf oysters of Vibrio is a pressurized treatment that kills the oyster (and the bug), and gives the added benefit of producing a pre-shucked oyster, because it detaches the adductor muscle from the shell.

Although the processed oysters cost about twice as much, foodservice operators make it back on lower labor costs, the processors maintain.

While the market for processed Gulf oysters is growing, demand for shucked oysters is flat at best. On the East Coast, prices to distributors for shucked meats have

held steady at between $42 and $45 a gallon most of the year, as

supplies have been adequate to meet demand.

On the West Coast, where almost 90 percent of the oyster harvest comes from Washington waters, one of the largest producers continues to switch more of its production into the halfshell trade, as demand for shucked Pacific oyster meats shrinks.

The company estimates that almost two-thirds of its production is now live oysters or frozen oysters on the halfshell, mostly exported to markets in Hong Kong.

“We’re getting out of shucked as fast as we can,” the producer says.

The weak market for shucked meats has led to a steady softening of prices. Medium-sized Pacific oyster meats that sold for $30 a gallon a few years ago have declined to $26 to $28 a gallon this year.

However, the lower prices have failed to stimulate demand, says one producer.

The market for live oysters for the halfshell trade, on the other hand, remains strong in spite of the increasing supply. Prices to distributors for Pacific oysters have held steady at $2.50 to $2.75 a dozen for smalls and extra smalls, and $3.50 for mediums, f.o.b. Seattle.

Washington growers say their production could be up this year to more than 4,000 metric tons (meat weight) due to the favorable growing conditions that typically follow an El Niño.

As demand for halfshell oysters grows, more West Coast producers are introducing sterile triploid oysters. Because these oysters don’t spawn, the meat is at peak quality year-round.

One grower estimates that within a few years, 80 percent of his production will be triploid oysters, which have the added benefit of growing faster.

The market for live Eastern oysters from New England and Canada has also been strong, says a leading distributor. Prices to distributors have averaged between $2 and $3.50 a dozen, depending on product origin.

Look for oyster pricing to follow a similar pattern in 2002, although a weak economy could lead to some moderate softening. 

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Scallops

Both seas and bays will remain a good buy in 2002

If you want evidence that conservation pays, look no further than the dramatic recovery of the sea scallop resource off the Northeastern United States.

After strict conservation measures, including severe reductions on the number of days fishermen could fish and total closures of certain grounds, sea scallops are back — big time.

At the end of September, scallop boats were on track to harvest 20,000 metric tons of sea scallop meats, a big increase over the 15,000 metric tons of meats they landed in 2000. The opening of the Hudson Canyon off New Jersey, with a quota of about 6,000 metric tons, is the main reason for the increase. And while the prospect of a new record is certainly good news, the fact that landings could increase even more over the next few years is even better.

The record landings (the previous record was 18,000 metric tons, set in 1990) have driven sea scallop prices to their lowest level in more than 10 years. This October, processed 20- to 30-count meats were selling to East Coast distributors for just $3.75 a pound, down more than $1 from last year’s levels and more than $2 a pound below 1999 pricing. Canadian dry scallops, meanwhile, were selling for about $1 a pound more.

The plunge in prices has prompted more buyers to switch to dry scallops, as they try to up-

grade quality instead of cutting prices.

“We’ve seen a 40 percent increase in our sales of dry scallops this year,” says the buyer for a large West Coast distributor. “Supermarkets are finally learning that the shrink from processed scallops

kills them.”

And the U.S. scallop industry isn’t alone in having a strong year. On the other side of Georges Bank, Canadian scallopers are also having a great year, and landings should again be near 10,000 metric tons (meat weight) this year.

The Chinese bay scallop industry is also bouncing back after some very disappointing seasons. At the end of July, U.S. imports of scallop meats from China were 4,200 metric tons, up 60 percent from 2000. Like seas, bays were a great buy at $2.50 a pound to distributors for 80- to 100-count meats. 

With scallop cold-storage holdings running more than 200 percent above last year’s, sea scallops should remain an excellent buy throughout 2002, as landings should continue at their current high levels.

Bay scallops will also remain a good buy. Even if this fall’s harvest is lower than expected, low sea scallop prices will keep a lid on prices for bays.

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