Frozen Sockeye Pace of Sales
The ASPR report for September-December 2006 and the annual production report for calendar year 2006 provide two data points to update an important development in the frozen sockeye market. The new data provides actual 2006 production of frozen H&G sockeye (80.6 million pounds, close to our estimate of 80-85 million pounds) and provides sales volume through December, which enables us to quantify pace of sales compared to previous years.
As covered in previous Seafood Market Bulletins, there has been a major shift in Alaska sockeye exports, away from Japan. In 2004 and 2005, Japan received 75 – 80 percent of Alaska H&G frozen sockeye production. That figure dropped to just 37 percent in 2006.
It is important to note that the dramatic decrease in Alaska sockeye exports to Japan is likely offset to some extent by reprocessing activity occurring elsewhere in Asia. Japan is likely receiving some Alaska sockeye imported by other Asian countries and subsequently reprocessed and sent on to Japan, though this activity is not reflected in the foreign trade data.
Despite that caveat, the decline in sockeye exports to Japan has important implications for Alaska sockeye. Namely that about 30 million additional pounds of frozen sockeye must be absorbed by alternate markets, chiefly Europe and the U.S. Tracking the pace of frozen sockeye sales with ASPR production and sales data provides a means to determine the pace at which that is happening.
The pace of frozen sockeye sales appears slightly better than 2005, but there is some underlying weakness in the figures which suggests frozen sockeye demand in alternate markets is still maturing.
Through December 2006, 81 percent of the frozen H&G sockeye pack had been sold, compared to 74 percent through December 2005. However, the percentage-sold figure reflects production volume of only 80 million pounds in 2006, versus 97 million pounds in 2005. Despite the higher percentage of pack sold in 2006, the poundage of frozen H&G sockeye sales during May-Dec dropped from 76 million pounds in 2004 to 71 million pounds in 2005 and to 65 million pounds in 2006. So while alternate sockeye markets have apparently absorbed a high percentage of 2006 frozen sockeye production, it is a high percentage of a modest pack. Actual sales poundage is down significantly.
Sales poundage is a poor stand-alone indicator, but average first wholesale prices for the May-Dec period strengthen the case that sockeye demand in alternate markets is still maturing. During May-Dec 2006, average first wholesale price of frozen H&G sockeye was $1.95 per pound, down from $2.09 per pound for the May-Dec period in 2005 (a decline of 7 percent). In sharp contrast, frozen H&G wholesale prices for all four of the other Alaska salmon species were up substantially across the same period, with price increases ranging from 24 - 35 percent depending on species.
