18 May 2020
One of the key themes emerging in many European countries as a reaction to the COVID-19 outbreak is the need for a renewed focus on local seafood production for domestic consumption. After years of globalization and dependency on imported seafood for EU domestic consumption, more products from the local fisheries will find their way to the market. Changes in selling techniques, such as online sales and direct buying of fishery products, will emerge in coming months.
The COVID-19 outbreak and the government measures introduced to reduce contagion risk are still overshadowing the European seafood market. Most importers have stopped purchasing as most countries remain in varying states of lockdown. However, there are some signs of improvement in the general situation, with restaurants reopening in several European countries. In the meantime, the industry is adapting to the shifting market conditions by offering new ranges of seafood retail products targeted at home-bound consumers.
In response to the COVID-19 crisis, some countries have taken a more nationally focused approach to marketing, promoting fish sourced domestically over imports from other EU countries.
Sales of canned fish were exceptionally good in April but activity has slowed since, with canned tuna producers reporting normal sales in May. Frozen tuna prices have fallen sharply over recent weeks, as plants are working at lower capacity due to COVID-19, but higher productivity has been reported in Ecuador.
BIVALVES
The situation for bivalves continues very difficult. The current COVID-19 crisis is very challenging for seafood sales in general and for bivalves in particular. However, it is likely that the change in the value chain due to the COVID-19, leading to more delivery services, will benefit bivalve trade in the near future. Bivalves are a product which is normally sold close to the production sites, therefore in principal an excellent product in the times of COVID-19.
Demand has plummeted in line with the closure of restaurants and the sharp decline in retail sales of live bivalves’ products.
The oyster sector is suffering particularly heavy damage, as trade of live oyster has become effectively impossible due to logistical problems. However, there are some cautious signs of improvement, with ready meals based on bivalves entering supermarkets and being met with good consumer interest.
CEPHALOPODS
The South African squid fishery re-opens on 1 July. Stocks are essentially nil, meaning price quotes are not available but it seems that the market remains strong. The rand has weakened against the euro, increasing revenue as measured in the local currency.
Currently, the supply of octopus raw material from Indonesia is limited as it is low season, and prices should be high. However, due to the COVID-19 situation, demand is reportedly very poor, especially from the Spanish restaurant sector, and prices are reportedly falling.
CRAB
Following panic-driven harvesting at the end of March due to the COVID-19, most Indonesian shrimp farmers have postponed stocking shrimp fry in their ponds, and prices are rising as a result. Demand is generally weak in Europe but supermarket sales have been increasing.
Demand for Argentine shrimp remains lacklustre, as fishing gets underway in the North. Most of the shrimp being caught are large, in the 10/20 category. These sizes are normally directed to the restaurant sector, which is locked down in many markets due to COVID-19. On the other hand, supply is limited for the 20/30 category and for 30/40 it is non-existent. As a result of imbalanced supply situation, prices have levelled off and are now approximately the same for all sizes. In some cases, larger shrimp are being sold at even lower prices than the smaller sizes, something that has not occurred before. There are some timid signs of market recovery, with sales picking up in May compared with April, and this trend is expected to continue into June.
Crab prices had already dropped due to decreased exports to China following COVID-19 restrictions, and the closure of the foodservice sector in Europe together with declining sales of festive products is compounding the situation. Improvement is unlikely in the near future, even with the restart of the Chinese market.
Lobster, which is heavily dependent on the restaurant trade, has been even more severely impacted as demand has decreased to almost nil. Even when restaurants reopen, it will likely take some time for demand to return to anywhere near previous levels, while the wider economic problems will make consumers shy away from luxury products.
FRESHWATER
Domestic freshwater fish producers in the European Union have been heavily impacted by COVID-19 as a high proportion of sales are in touristic restaurants close to production areas. The possibility of selling to the retail sector is essentially nil, as competition from imported freshwater fish is heavy and consumers are not willing to pay the premium prices that restaurants were able to offer. However, as inland water fishers have not technically been preventing from producing they are not eligible for government assistance.
Pangasius prices are reportedly stable, even though this sector has also been impacted by the shutdown of restaurants and fish and chips outlets.
GROUNDFISH
The fresh groundfish market has been heavily impacted by the COVID-19 lockdown. Prices for large Dutch sole, which are normally around EUR 16.00 per kg at this time of the year, have collapsed to EUR 13.00 per kg. This price decline is expected to continue.
The outlook for the groundfish market in Europe for the rest of 2020 is extremely uncertain. While China was able to return to near-normal conditions after just a few months, the same cannot be expected in the European Union.
For the rest of 2020, demand is expected to continue to shift from the restaurant and foodservice sector to the retail and home-delivery sector, with an emphasis on frozen products. Prices are likely to decline a little, and trade may be more restricted than previously expected. There is a lot of uncertainty regarding cod price development, but the general consensus seems to be that they will stay high or go higher, both because of the slightly tighter supply situation and because of market demand.
The market situation is still poor for wet-salted cod fillets from frozen raw material (Gadus macrocephalus), and wet-salted cod fillets (Gadus morhua) from fresh raw material of Faroese and Icelandic origin. The HORECA (hotel, restaurant & catering) sector, an important outlet for wet salted cod, is completely locked down and distributors have plenty of fish in stock. In Italy, restaurants and bars will open again on Monday 18 May, while in Spain the reopening is set to take place some weeks later.
SALMON
The current situation in the European market for farmed Atlantic salmon is marked by significant uncertainty and business repositioning. The COVID-19 crisis continues to inhibit operations at farms and processing plants while rising unemployment and a darkening economic outlook is set to take a heavy toll on consumer purchasing power. In the EU market, a sharp reduction in foodservice demand has seen consumption drop by some 30 percent over the last few months, although sales of processed and preserved forms at retail have received a boost in many European countries. Meanwhile, prices have dropped around 30 percent while logistical and operational costs have risen, eating away at margins all along the supply chain. Prices for larger fish have dropped relatively faster, a reflection of the high proportion of large sizes that are sold on Asian markets which enforced COVID-19 restrictions earlier in the year. As of week 19 2020, the NASDAQ salmon index stands at NOK 48.61 per kg, compared with peaks nearing NOK 80 per kg earlier in the year. According to the most recent figures published by the Norwegian Seafood Council (NSC), the value of Norway’s salmon exports fell by NOK 813 million, or 13 percent, in April compared with the same month in 2019. Volume fell by 3 percent, to 83 100 tonnes. NSC analysts point to lower demand and increased air freight costs as two of the main drivers of the price decline, although a weaker Norwegian krone has softened the blow somewhat.
In the UK, Scottish exporters are reporting a similar decline to their Norwegian counterparts, with 2-4 kg fresh whole Atlantics being traded at around GBP 4.20 in week 19. Prices for larger sizes in the 4-6 kg range were not much different, as the premium on larger fish has now been completely eroded.
When demand is low, farmers will tend to keep fish in the sea for as long as possible, and this translates into inflated biomasses and delayed harvests. As a result, late 2020 is now expected to see significantly higher than expected volumes of farmed Atlantics hit European markets, with analysts at SpareBank suggesting the increase could be as much as 9 percent compared with 2019. However, according to current forecasts, this relative supply glut could coincide with the return of demand, particularly in the foodservice sector. Forward prices at Fish Pool are largely reflecting this prediction, remaining stable around NOK 50 per kg for most of the remainder of the year.
SEABASS AND SEABREAM
Prices are staying relatively high in the European bass and bream market, as the lack of demand resulting from the shutdown of the European restaurant industry due to the COVID-19, is being countered by much tighter supply this year. A sharp reduction in stocking in 2019 combined with losses from storm Gloria in Spain has translated into a substantial drop in volumes, which is softening the impact of the COVID-19 crisis somewhat.
The industry is still suffering, however, as sales have dropped by some 40 percent and financial losses are mounting. Like other sectors, marketing focus has shifted to retail, but the fact that most bass and bream is sold as fresh product is presenting some challenges as consumers are mainly interested in preserved products.
TUNA
The poor fishing situation for tuna is persisting in the Western and Central Pacific (WCP) and carrier arrivals in Thailand remain low. Despite this, Thai canneries are still reporting sufficient raw material inventories and while COVID-19 is still affecting transhipment operations in the WCP, the situation is much better compared with last month. Several ports have relaxed their rules and are allowing transhipment to take place. Finished goods orders for retail sizes have stabilised as panic buying has subsided while orders for food service sizes remain limited. Skipjack prices have fallen, driven to a large extent by historically low fuel prices which have translated into reduced costs for tuna fishers.
Catches in the Indian Ocean have been moderate and raw material inventories at local canneries are healthy. As local canneries are still working at reduced capacity, there has been an increase in transhipment activities with fish being diverted to other markets. Skipjack and yellowfin prices have fallen.
Fishing in the Eastern Pacific remains good and raw material inventories at local canneries are healthy. Canneries are reported to have increased their working capacity to 60-70% from the 50% due to COVID-19 restrictions in April 2020. As the raw material supply remains high, skipjack and yellowfin prices have moved lower.
Catches in the Atlantic Ocean have slowed to moderate-to-low, mainly due to strong currents. As a result, raw material inventories at local canneries remain moderate-to-low. However, skipjack and yellowfin prices have decreased, in line with price trends in other markets. Due to the COVID-19 outbreak, Thai Union has had to close its Ghanaian plant. In Europe, prices for skipjack and yellowfin have fallen while prices for cooked, single cleaned skipjack loins have remained stable.