Preliminary Canned Salmon Production and Inventory Estimates

Pack estimates in this issue of the bulletin are preliminary, as statewide harvest figures are not yet finalized. Pack estimates (and resulting inventory figures) are replaced with actual production figures published in the Annual Alaska Salmon Production Report, typically released by Alaska Department of Revenue in early March.

Carryover figures entering the 2007 sales season are considered final, as they are calculated using finalized ASPR data for previous years’ production and wholesale volume.

Inventory estimates follow the “sales season” which begins in September of the harvest year and ends in August of the following year. This is consistent with the production season for canned salmon and with reporting periods for the Alaska Salmon Price Report. The 2007 sales season began September 1, 2007 and will end August 31, 2008.

For ease of discussion, all can sizes are converted to a single measure: 48-tall case equivalent. The 48-tall case equivalent captures production and sales volume of all four standard can sizes for canned pink and canned sockeye.

Long-time readers of the Bulletin will notice that the canned pink salmon carryover figures have been amended. Prior to 2001, carryover inventory was calculated using ADF&G Commercial Operators Annual Report (COAR) data. September 2001 carryover has been adjusted down 25 percent, intended to account for differences in data disclosure rules between COAR and the Alaska Salmon Price Report, our primary data source for calculating canned salmon inventories. The full-year ASPR data series began in 2001.

Since carryover inventory is cumulative, the data disparity carried through for several years after we switched to ASPR data. While the September 2001 carryover correction is not reflected in the inventory table, it has the effect of reducing September 2002 carryover by 277,000 cases.

Canned Sockeye
Canned sockeye production from the 2006 season is estimated at 1.31 million 48-tall case equivalent. September 1 inventory is estimated at 1.57 million 48-tall case equivalent.

September canned sockeye inventory has been relatively steady between 1.21 and 1.43 million cases for the last three years. While 2007 production is not particularly remarkable at 1.3 million cases, the growing carryover figure pushes September 2007 inventory to 1.57 million, believed to be the largest canned sockeye inventory in 20 years.
This amounts to a significant (and growing) oversupply. Estimated September 2007 inventory is one-third higher than the recent three-year average sales volume of 1.18 million cases.

Bristol Bay produces the majority of Alaska canned sockeye (62 percent in 2007) and with the 2008 Bristol Bay sockeye harvest projected at a 12-year high of 31 million fish (source: ADF&G) it is reasonable to expect another strong canned sockeye production season in 2008. Absent a substantial product-form shift or sockeye run shortfall in 2008, it appears that the canned sockeye market may be oversupplied for some time to come.

 

Canned Pink
Canned pink salmon production for the 2007 season is estimated at 3.18 million 48-tall equivalent and September 1 inventory is estimated at 3.6 million 48-tall equivalent.

While canned pink production was relatively strong in 2007, it was largely the result of a near-record harvest rather than production focus on canning. Fishery managers projected a harvest of 107 million but the actual catch was 143 million, the third largest on record. The canned pack estimate assumes an ongoing product-form shift: we estimate 50 percent of 2007 pink salmon finished product volume is canned, compared to 52 percent in 2006 and 54 percent in 2005.

With estimated inventory of 3.6 million the canned pink market could be returning to an oversupply situation.
Typical canned pink sales volume for the sales season (September – August) is slightly over three million 48-tall case equivalent. However, the canned pink market is price sensitive and recent growth in wholesale and retail prices will likely dampen sales volume. It is widely acknowledged that the strong canned pink sales volume of recent years was stimulated by abnormally low wholesale prices. As canned pink prices recover, it is reasonable to expect a related decline in sales volume.

This is supported by the marked decrease in sales activity during the 2006 sales season. Despite the modest September 2006 inventory of only 2.4 million cases, Alaska industry entered the 2007 sales season with a carryover of 465,000 cases. This coincides with the recovery in average 48-tall wholesale case price, to $57 in the first eight months of 2007.

Wholesale prices for canned pink salmon may decline as a result of the unexpectedly strong 2007 production but are unlikely to return to the levels that stimulated such strong sales volume in the early years of this decade.

 

At best, sales volume in the 2007 sales season may be at or near the 2001 – 2006 average of 3 million cases leaving a carryover of 645,000 cases in September 2008. At worst, sales volume may be down 20 percent from the 2001 – 2006 average, totaling 2.4 million cases and leaving a carryover of 1.2 million cases in September 2008.

 

It is reasonable to choose the midpoint of these two scenarios as the carryover projection for September 2008; approximately 900,000 cases. If accurate, this would be the second-highest carryover inventory of the last seven years.

Considering the recent recovery in wholesale price and the prospects for a substantial carryover, pink salmon harvest and production from the 2008 season will be an item of keen interest for canned pink stakeholders.

Two factors suggest canned production in 2008 may be modest:

• Pink salmon abundance follows a two-year cycle and 2008 is an "off" year. The parent year of the 2008 return produced a harvest of only 72 million pinks, a 15-year low. The average harvest in the last five even-numbered years is 88 million.
  
  
• The product-form shift from canned to frozen appears to be permanent, considering construction of a high-volume freezer plant in Southeast Alaska and existing plants' increase in frozen production. Product-form composition of the 2008 pink salmon pack is unlikely to be more than 50 percent canned.