January 2007 Canned Salmon Inventories
Alaska Department of Revenue released the September-December 2006 Alaska Salmon Price Report (ASPR) in late February, completing the data series for the calendar year. The Department released its 2006 Alaska Salmon Production Report in mid-March. Canned salmon production figures from the report replace our post-season canned salmon production estimates with actual production figures, the final piece needed to update canned salmon inventories to January 2007.
Compared to the actual production figures published in the 2006 ASPR production report, SMIS’ 2006 post-season canned salmon production estimates were accurate to within 10 percent for pink salmon and accurate to within 4 percent for canned sockeye.
For ease and clarity of discussion, all can sizes are converted to a single measure, the 48-tall case equivalent. This applies to both production and sales figures.
Canned Sockeye
The January 2007 canned sockeye inventory is 873,000 cases, 22 percent above the five-year average January inventory of 716,000 cases.
The inventory figure is significant in light of five-year average sales volume for the January – August period; 704,000 cases. If sales of canned sockeye proceed at a normal pace for the remainder of the sales season, carryover inventory entering the next sales season (September 2007) would be on the order of 150,000 – 200,000 cases, consistent with September 2006 carryover. However, recent canned sockeye sales volume is about 12 percent higher than normal and could potentially reduce (but not eliminate) the volume of carryover inventory entering the 2007 sales season. Sales during September – December 2006 totaled 504,000 48-tall case equivalent, about 57,000 cases above five-year average volume for the period.
The 2007 production outlook for canned sockeye is similar to production levels of the last three years. Sockeye harvests during 2004 – 2006 ranged from 41-43 million fish statewide, including 24-28 million sockeye from Bristol Bay. The 2007 projection calls for a statewide sockeye harvest of 41 million, with a Bristol Bay component of 26 million.
It is reasonable to expect 2007 canned sockeye production will be consistent with production of the last three years, within the range of 1.2 – 1.4 million cases 48-tall basis, which is slightly above typical sales volume. The five-year average of canned sockeye sales is 1.13 million cases.
Canned Pink
The January 2007 canned pink salmon inventory is 1.74 million cases, nearly 40 percent below the five-year average January inventory of 2.8 million cases. The five-year average sales volume for January – August is 1.93 million 48-tall case equivalent. Clearly, the prolonged period of oversupply in the canned pink market is over.
While the inventory figure is at 1.74 million cases as of January 1, industry reports there is little (if any) uncommitted canned pink salmon in the marketplace. Sales volume of canned pink is expected to slow throughout the Spring as prices rise to reflect the scarcity of uncommitted canned pink. The September-December 2006 average first wholesale case price for 48-tall canned pink is nearly $54, a 10-year high point.
Retail prices for canned pink show similar inflation, with the most recent AC Nielsen quote at $1.90 per tall can in March 2007, a 9-year high.It should be noted that U.S. retail sales volume is light, totaling about 233,000 48-tall equivalent in the first three months of 2007, compared to the previous 3-year average of 429,000 cases. (source: AC Nielsen)
Canned Pink Production Outlook
The production outlook for canned pink salmon in 2007 is uncertain. While the ADF&G harvest projection calls for a statewide harvest of 108 million pinks, recent history suggests the actual 2007 harvest will be closer to 130 million. (See salmon projection article in February 2007 Seafood Market Bulletin for discussion of odd-year projection error.)
While a robust pink harvest appears very likely in 2007 the product-form composition of the resulting pack is less clear, as the shift from canned to frozen pink salmon appears to have slowed in 2006. The share of the pink salmon pack produced as canned product declined from 74 percent in 2001 to 56 percent in 2005. However, the momentum of that shift slowed in 2006 with the canned percentage rebounding slightly to 57 percent.
At this point it is unclear whether the loss of product-form-shift momentum was a result of production issues around disparate regional performance of the pink return, or whether it represents equilibrium in the product-form mix of Alaska pink salmon.
Assuming a harvest of 130 million pinks in 2007, and assuming the percentage canned to be either 50 percent or 55 percent, the canned pink salmon pack would range between 2.8 million and 3.1 million 48-tall case equivalent. The five-year average sales volume is 3.2 million cases.
