lobster outlook 2018 - new brunswick · 18 inventory situation on lobster products • there are...

1

Lobster Outlook 2018John Sackton

Seafood DatasearchShippagan, Moncton, Shediac

March 20-22, 2018

2

Background• 40 Years in Seafood Industry

• Crab, shrimp and lobster market analyst since 1997

• Preseason price and market outlooks on shrimp, crab, lobster – Atlantic Canada, Alaska, US West Coast

• Price arbitrator for Alaska crab

• Shrimp, Crab, Lobster Analyst for NFI

• Co-Founder of NFI’s Global Seafood Market Conference

• Publisher of Seafood.com News

3

Outline for Today• OverviewofLobsterMarkets:US,China,Europe• Reviewof2017pricing(springandfall)• DifferencesinProductFormSupply

– TailsandMeat,Frozenwholecooks,Live• RoleofLobsterinUSShellfishMarket

– Foodservicesales– Retailsales

• RoleofLobsterinChina• OtherCanadianMarketsforLiveandFrozenLobster• Outlookfor2018

3

4

Global lobster supply

54,092 48,04658,137 57,706

66,265 66,09074,055 77,018

84,807 86,198 92601 91682

34,17629,019

31,710 36,820

43,640 47,593

57,748 57,97356,257 55,521

59,85350311

8,620

7,013

7,4038,176

8,9889,183

9,795 9,66610,174 10,747

11,789

7520

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MetricTons

After9YearsofGrowthTotalLobsterLandingsWillDeclinein2017Canada Maine OtherUS

Seafood Datasearch and Urner Barry

5

US Domestic lobster supply fell in 2017

• Source:CustomsDataandIndustryLandingsestimates

5

-150,000,000

-100,000,000

-50,000,000

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

2011 2012 2013 2014 2015 2016 2017yrest

POUNDS

USlandings CanadaImports(live) USImportsMeat USImportsTails(homarus)

USimportsTails(rock/Spiny) USexportsLive(NotCa) CanadaExports(live)

6

China Lobster Supply

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2013 2014 2015 2016 2017

ChinaLobsterGrowthisNotSlowing

Seafood Datasearch: customs data

7

European Lobster Supply

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2013 2014 2015 2016 2017

EUImportsofAllHomarusLobster

CALive USLive CAFzn USFzn


8

Overall Comparison of CA Live Exports

0

10000

20000

30000

40000

50000

60000

2013 2014 2015 2016 2017

LiveLobsterExportsbyMarket

CAChina CAEurope CAUS Other

Seafood Datasearch: Intracen customs data

9

Frozen lobster excluding meat

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2013 2014 2015 2016 2017

FznExportsbyMarket

CAChina CAEurope CAUS Other


10

Meat exports

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

2013 2014 2015 2016 2017

LobsterMeat


11

US Meat and tail pricingCK meat vac pack

Tails – left axisMeat – right axis


12

US Live Pricing


13

Live prices and Currency

1.1

1.15

1.2

1.25

1.3

1.35

1.4

1.45

$6.00

$7.00

$8.00

$9.00

$10.00

$11.00

$12.00

$13.00

1/1/162/1/163/1/164/1/165/1/166/1/167/1/168/1/169/1/16

10/1/16

11/1/16

12/1/161/1/172/1/173/1/174/1/175/1/176/1/177/1/178/1/179/1/17

10/1/17

11/1/17

12/1/171/1/18

PricingofLiveandCurrencyChinaVal$CA USVal$CA $USDSalePrice USDXCAD


China exp val $CA

US exp val $CAUS Dollar Value

14

Canadian Export Price to China

$-

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

1/1/16

2/1/16

3/1/16

4/1/16

5/1/16

6/1/16

7/1/16

8/1/16

9/1/16

10/1/16

11/1/16

12/1/16

1/1/17

2/1/17

3/1/17

4/1/17

5/1/17

6/1/17

7/1/17

8/1/17

9/1/17

10/1/17

11/1/17

12/1/17

1/1/18

LiveVolumeandPricetoUSandChina($CA)

Chinaqty usqty ChinaVal$CA USVal$CA

Seafood Datasearch

15

Shore Prices

3.5

4

4.5

5

5.5

6

6.5

7

7.5

8

8.5

04/05/16

05/05/16

06/05/16

07/05/16

08/05/16

09/05/16

10/05/16

11/05/16

12/05/16

01/05/17

02/05/17

03/05/17

04/05/17

05/05/17

06/05/17

07/05/17

08/05/17

09/05/17

10/05/17

ShorePrices2016and2017PEICNR NBN.ShoreCNR PEI NBN.Shore NSN.Shore Newfoundland

Seafood Datasearch

16

Tail - 20-24%

Claw knuckle leg meat:9% to 13%

Live - 100%

Whole Cooked - 86%(average cook loss, can be reduced about 5% with STP)

Yield is key to understanding Lobster pricing and why live lobster

demand sets shore prices

Calculations based on averageof 22% for tails and 11% for meat

17

Breakdown of 500 lbs lobster by raw material pounds and cost at various shore

pricesCostatShorePrice

Livelbs WholeCooklbs

Tailslbs Meat;bs Processed(tails/meat)

100% 86% 22% 11%lbs 500 430 110 55 1655.00 $5.00 5.81 22.73 45.45 15.156.00 $6.00 6.98 27.27 54.55 18.187.00 $7.00 8.14 31.82 63.64 21.21

At a $6.00 shore price, a lobster processor would havean input cost of $6.98 for whole cooks, and $18.18 formeat and tails. (Converted to US at $1.25 = $5.58, $14.54)

18

Inventory Situation on Lobster Products

• Therearehighcostinventoriesofwholecooksstillexisting.Atlastspringpriceof$6.50;thesewholecookscost$7.56.AftertheJanuarycrackdownonshippingthruVietnam,Chinesepricesfellaslowas$5.65US/$7.06CA.

• IfLobstermeatproducedlastyearhasanaveragecostof$6.00CA,thetotalrawmaterialvaluewouldbe$18.00;tailcostwouldbe$12.00;meatcostwouldbe$24.(US$9.60/$19.20)Atcurrentprices,salesoftailshavetosubsidizemeat.Meatinventoriesalsoexist.

• Goingintothe2018season,tailsaretheonlyproductwhichisindemand,andcanprovideareturnbacktotheprocessor.

19

Lobster tails

• Processorscutbackontailproductionin2017.

• LowerexportsfromMainewerealsoafactor.

• Result:currentmarketshortagefortails,withrisingprices

6-7 oz

3-4 oz

20

Lobster meat

• HighPricesin2015ledtoover- productionandcustomerstakingmeatoffmenus

• Oversupplycontinuedin2017.

• Currentpricingappearstobestabilizing

21

Frozen whole cooks

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.001/1/16

2/1/16

3/1/16

4/1/16

5/1/16

6/1/16

7/1/16

8/1/16

9/1/16

10/1/16

11/1/16

12/1/16

1/1/17

2/1/17

3/1/17

4/1/17

5/1/17

6/1/17

7/1/17

8/1/17

9/1/17

10/1/17

11/1/17

12/1/17

1/1/18

ChinaValuWC$US

Using $US dollar prices to China, we can see a declining trend for Whole Cook prices in last few months

22

US Lobster Supply with Maine Production

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

2014 2015 2016 2017

pounds

USLobsterSupplywithMaineProduction

USLiveTotal TotalWholeCooks Tails Meat

23

Breakdown of US Lobster by Product in 2017

USLiveTotal64%

USWholeCooks1%

CAWholeCooks2%

Tails19%

Meat14%

2017

USLiveTotal USWholeCooks CAWholeCooks Tails Meat


24

US processing

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

2014 2015 2016 2017

USLobsterProcessing

UsLiveDomestic USLiveImports UsForProcessing USWholeCook USTails USMeat


25

Live Lobster


26

Estimating Whole Cook Volume• Wholecooksaretheweakestmarketatthistime.

• Estimatingpercentagesoffrozenlobstergoingintowholecooksandtailsisdifficult.

• Thisyeartherewillbeastrongmarketincentivetoproducetailsandmeat,fewerwholecooks.

27

Estimate by Yield

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2013 2014 2015 2016 2017

CanadaexportstoWorld

30612-Fznlobster 160530-lobstermeat

Seafood Datasearch

28

Conversions2013 2014 2015 2016 2017

liveweightmeat 75436 78136 81436 97500 81955tailsfrommeat 16596 17190 17916 21450 18030usfzn 15,292 16,197 16,164 15,712 14,536tailsus 12998 13767 13739 13355 12356wholecookus 2294 2430 2425 2357 2180Remaintails/pops 3597.8 3422.55 4176.6 8094.8 5674.4

0

2000

4000

6000

8000

10000

12000

2013 2014 2015 2016 2017

EstimatesofWholeCooks

wholecookus RemainFzn(MostlyWholeCook)

Problem is this doesnot accountfor unsoldMeat in inventory

Seafood Datasearch

29

Estimate by Exports2016 2017

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Jan Feb

March

April

May

June Ju

lyAugSept Oc

tNov

Dec

CanadianExportsofFrozenin-shellLobster,bymonth,2016,inkg

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

Jan Feb

March

April

May

June Ju

lyAugSept Oc

tNov

Dec

CanadianExportsofFrozenin-shellLobster,bymonth,2017,inkg

Seafood Datasearch and industry

30

Surge in whole cook exports in June and July at High Prices

3,229,934

4,419,704

0500,000

1,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,0004,500,0005,000,000

2016 2017

June-July

Seafood Datasearch and industry

31

Summary

• Highpricedwholecookshaveslowedthemarket;manysellersarelosingmoney.

• DisruptionofVietnam-Chinabordertradeatendof2017hadbigimpact.

• Resultisthatmarketforwholecooksisweakerthanlastyear.

32

Live Homarus has come to dominate China Lobster Supply

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2012-Q4

2013-Q1

2013-Q-2

2013-Q3

2013-Q4

2014-Q1

2014-Q2

2014-Q3

2014-Q4

2015-Q1

2015-Q2

2015-Q3

2015-Q4

2016-Q1

2016-Q2

2016-Q3

2016-Q4

2017-Q1

2017-Q2

2017-Q3

ChartTitle

LiveLobster RockLobster FznHomarus

Seafood Datasearch Customs data

33

72% of total supply in 2017 was homarus

LiveHomarus60%

LiveRock28%

FznHomarus12%

ChinaLobsterin2017

LiveHomarus LiveRock FznHomarus


34

Live Homarus imports to china

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2013 2014 2015 2016 2017

ChinaLiveHomarusImportGrowth

Q2 Q3 Q4 Q1


35

Fzn lobster to China

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

2013 2014 2015 2016 2017

FrozenLobstertoChina,InclThruVietnam

Q2 Q3 Q4 Q1 Vietnam


36

Fzn Exports Peak in Q 3 and 4

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2012-Q4

2013-Q1

2013-Q-2

2013-Q3

2013-Q4

2014-Q1

2014-Q2

2014-Q3

2014-Q4

2015-Q1

2015-Q2

2015-Q3

2015-Q4

2016-Q1

2016-Q2

2016-Q3

2016-Q4

2017-Q1

2017-Q2

2017-Q3

FznHomarustochinabyQtr

FznHomarus


37

Exports of whole cooks to Vietnam surged in 2017

0

100,000

200,000

300,000

400,000

500,000

600,000

jan Feb Mar apr may jun jul aug sep oct nov dec

KgFznWholeCooktovietnam

2015 2016 2017 2018


38

Growth of China Demand is not slowing

• Althoughwholecookmarketisweak,Chinademandisnotslowing.

• Canadianexportsoflivelobsterandfrozenincreased.

02,000,0004,000,0006,000,0008,000,00010,000,00012,000,00014,000,00016,000,00018,000,000

2016 2017

ChartTitle

fzn live

Live + 16%Fzn + 27%

39

Competitive Price Pressure• ButChinaisbecomingamorecompetitiveandpricesensitivemarket.

• Pressuretocutcostsforexportsbycuttingoutcommissionagents

• LargebuyerslikeAlibabaexertheavypressureonprices

• Inanoversupplymarket,Chinesebuyershaveanadvantage

40

China Outlook: More Competitive

• 2018willgiveChinesebuyerschancetosqueezepricesonfrozenlobster.– HeavylandingswillhavetobeprocessedaswholecooksduetolaborshortageinPEI.

– Yetsomehighpricedwholecookedinventorystillunsold

– Borderdisruptionhashurtmarket– Processorswillbereluctanttosellataloss.– Asaresult,thiswillimpactshorepricing.

41

Timing of Season• Timingoflandingsisacriticalfactorinsettingseasonalprices.

• Heavylandingspushpricesdown;• LaborisbecomingmoreofanissueforprocessinginPEI,NB.

• Resultiswhenplantcapacityformeatandtailsexceeded,nochoicebuttodowholecooks.

• Smallcannersalsomostlywholecooks.

42

Price and Inventory Pressure• Marketpressuresontailsvs.wholecooksmovinginoppositedirection.

• Shortageoftailsisdrivingupprices.• Couldleadtoacutbackinbuying.• Weaknessofwholecooksisadragonprices.

• Inventoriesofwholecooksstillexist.• Meatinventoriesaremorecleanedup.

43

Currency factor in US sales

2017 has been slightly strong vs dollar than 2016 (bad for exporters)

April - May

current

44

Outlook and PredictionsPositiveSignals

• Chinademandcontinuestoincrease

• 2018willbefirstfullyearofCETAagreement

• USEconomycontinuestobestrong.

• Meatpricesappeartobestabilizing.

• Livepricesinnormalrange.

• Tailpricesstronger

NegativeSignals

• Wholecookmarketisweak• Chinaisamorecompetitivebuyerwithdownwardpricepressure.

• Buyershavenotfullyreactedtotheincreaseintailprices.

• Laborissuesforceplantstoproducewholecooksevenwhenmarketwantstails

• Currencyisnegative

45

Thank you.Time for Questions

lobster outlook 2018 - new brunswick · 18 inventory situation on lobster products • there are...

Documents