Frozen Sockeye Market
First wholesale value of the Alaska salmon industry was $906 million in 2007. Frozen H&G sockeye remains the most valuable single-species salmon product produced in Alaska, with first wholesale value of $160 million in 2007.
The frozen sockeye market has changed significantly in recent years, with respect to export trends and the pace of frozen sockeye sales. This remains a subject of keen interest for stakeholders, as sockeye will likely continue to be the top-value Alaska salmon product in the foreseeable future.
Background: Changing Export Patterns through 2007
The export and sales patterns of 2004-2007 are the most relevant for illustrating the changing market for Alaska frozen sockeye. Harvest volume was strong in all four years (42-47 million sockeye per year) and production of frozen H&G sockeye was fairly stable, ranging from 82-96 million pounds. Market conditions throughout the period reflect the modern era, with a long-established and plentiful market supply of farmed salmon and generally positive regard for wild salmon.
Traditionally, the bulk of Alaska frozen sockeye production has been exported directly to Japan, immediately after the season. In 2004 and 2005, well over two-thirds of Alaska���s total frozen sockeye production was exported to Japan by the end of September. This changed in 2006 when frozen sockeye exports to Japan fell sharply to just 34 percent of production and declined further in 2007, to 28 percent of production.
The initial impression from these export figures is that sockeye consumption in Japan has fallen dramatically. However, the decline is probably far less dramatic than the export figures suggest. Consistent with global food industry trends, some degree of labor-intensive seafood processing has migrated from Japan to cheaper labor markets. Through September 2007, U.S. exports of sockeye to Japan totaled 25 million pounds, but sockeye exports to China were a close second at 21.5 million pounds. It is reasonable to assume that a significant volume of Alaska sockeye enters Japan via secondary processing in China.
Current Situation: 2008 Sockeye Exports
U.S. frozen sockeye exports to Japan have rebounded significantly in 2008. Through September 2008, Japan received 35 million pounds of U.S. frozen sockeye exports, approximately 43 percent of the estimated 2008 season production. This is a substantial increase from 25 million pounds during the same period in 2007.
Estimated frozen H&G sockeye production from the 2008 season is 80 million pounds.
The growth in Japanese imports of frozen sockeye is accompanied by a modest decline in exports of frozen sockeye to China. During January-September 2008, Chinese imports of U.S. sockeye total 18 million pounds, down from 21.5 million for the same period in 2007.
Pace of Sales
The Alaska Salmon Price Report tallies sales when product passes outside the processor���s affiliate network. This distinguishes actual sales from exports to bonded cold storage overseas, and enables a rough estimate of the pace of frozen sockeye sales.
In 2004, when the traditional sales pattern revolved around selling most of the frozen sockeye pack to Japan immediately after the season, frozen H&G sockeye sales through August amounted to 66 percent of that year���s production. As that traditional pattern changed, the pace of sales slowed, apparent in the declining percentage of frozen H&G production sold by the end of August: 53 percent in 2005, 45 percent in 2006 and 36 percent in 2007.
2008 is the first time in five years that the pace of sales has increased. Frozen H&G sockeye production is estimated at 80 million pounds, and through August 2008, 43 percent of that production has been sold.
In terms of market implications, the increased pace of sales and the 10-percent increase in average first wholesale price of frozen H&G sockeye suggest the market is firming, at least through the end of August.