Significantly more king crab is being shipped out of Russia in 2012 compared to 2011. Overall, imports of Russian king crab by Japanese and U.S. buyers are up 70 percent through August (year to date). Russia���s total allowable catch for king crab in 2012 is roughly 9,300 metric tons, in live weight terms. Yet, through August Japanese and U.S. buyers have purchased 13,100 tons of mostly frozen sections. The amount of frozen and live Russian king crab purchased by importers through August is equivalent to 19,800 metric tons of live crab, or more than twice the amount of Russia���s entire 2012 TAC. It is estimated that illegal, undocumented, and unreported (IUU) Russian king crab harvests in 2011 totaled over 16,000 metric tons. Therefore, the large imbalance between trade volume and TACs (total allowable catches) is presumed to represent increased IUU harvest in recent months.
Japan and Russia recently signed an agreement which will make it more difficult to import illegal crab into Japan from Russia. The terms of the agreement are expected to go into effect either later this year or during the first quarter of 2013. This may be one of the reasons king crab imports are up sharply, as holders of IUU product attempt to unload product before the new rules take effect. In addition to the Japan-Russia agreement, Russia and the U.S. have also reached an agreement that will improve coordination between the two countries in the hopes of stopping illegal operations in the North Pacific.
IUU crab is an important issue for Alaska fishermen, as it puts additional supply on the market resulting in lower prices. Buying illegal snow crab and king crab, even unknowingly, poses a significant risk to importers and distributors. For instance, Harbor Seafoods had 112 tons of illegal Russian crab worth over $2 million seized by federal agents in 2011. The importation of seafood products harvested in violation of foreign law is illegal in the U.S. under the Lacey Act. In a civil court judgment, Harbor Seafoods was by all accounts unaware of the crab���s true origin, but agreed to implement remedial training for employees concerning laws related to importing seafood. The illegal crab was eventually sold (despite the protest from members of Alaska���s crab industry) and the company received $300,000 of the proceeds, but forfeited the majority of sale proceeds to the federal government.
Snow crab supplies in Japanese and U.S. markets are virtually unchanged in 2012, despite a much larger Alaskan harvest during the first quarter. Japanese buyers have been increased their purchases of Alaska snow crab in recent years, likely due to the strong yen (versus the U.S. dollar) and less snow crab available from Russia.
China Buys More Crab
Chinese imports of frozen and live crab are up significantly and U.S. crab accounts for nearly half of the increase in 2012. China has imported 19 percent more crab through July 2012 compared to the prior year, and the value of that imported crab has jumped 48 percent from $233 million to $345 million. So, either crab prices are going up, or Chinese buyers are switching to more expensive crab species. Both scenarios hold potential for Alaska crab processors and distributors.
Live crab has been driving growth in Chinese crab imports in recent years. In 2008, the China imported less than 10,000 tons of live/fresh crab. Last year, the country imported over three times that amount and 2012 imports are on pace to increase again.
China is known for being the world���s largest secondary processor of seafood products. Most imported seafood is filleted and then re-exported as a twice-frozen product to other developed countries. However, virtually all imported live crab is consumed in domestic Chinese markets. Live crab are so popular in China, there is even a company which sells them in vending machines. A portion of the frozen crab product imported into China is picked and turned into canned or vacuum-sealed crabmeat products, but a significant amount of frozen crab sections are also consumed domestically.
Unfortunately, trade codes used by most Chinese importers do not differentiate between various crab species. However, based on anecdotal reports it is clear that frozen snow crab from Canada and live Dungeness crab from the Pacific Northwest are being shipped to China in significant quantities.
Alaska may be uniquely positioned to meet the growing demand for premium live crab in China. The Ted Stevens Anchorage International Airport is one of the busiest cargo airports in the world and a regular refueling stop for cargo planes traveling between Asia, the U.S., and Europe. Planes typically return to Asia with little-to-no cargo, and therefore customers may be able to procure cheaper ���backhaul��� rates (compared to the regular cost of shipping internationally).
The U.S. dollar has weakened versus the Canadian dollar and Russian ruble but strengthened versus the Japanese yen, since last October. This is generally good for Alaskan producers, because even though the currency of Alaska’s largest export destination (Japan) has strengthened versus the US dollar the value of Alaska’s competitors has gone even higher. All things being equal, this makes Canadian and Russian goods more expensive relative to Alaskan product in Japan and the U.S. (compared to last October). Domestic producers, such as Alaska crab fishermen, realize higher prices when the U.S. dollar is relatively weaker than other currencies. The tradeoff is that a weak U.S. dollar makes imported goods more expensive for American consumers.
The 2012/2013 Bristol Bay red king crab and St. Matthew blue king crab fisheries kicked off October 15th and will run through January 15, 2013. The Aleutian Islands golden king crab fishery opened August 15th. Virtually all the king crab harvested in the 2012/2013 season will be shipped out of Alaska prior to the new year.
Alaska fishermen will be allowed to harvest 7.85 million pounds of Bristol Bay red king crab, 6.29 million pounds of Aleutian Islands golden king crab, and 1.63 million pounds of St. Matthew blue king crab during the 2012/2013 season.
King crab TACs are down 2 percent in 2012/2013 versus last season. Despite the lower TAC, it is likely that the actual harvest will be equal to or slightly higher than last season. This is because the St. Matthew blue king crab fishery lost about 700,000 pounds of TAC, but TACs in golden and red king crab fisheries increased. Typically, all or nearly all of the TAC in golden/red king crab fisheries is harvested, as opposed to the blue king crab fishery. Blue king crab are more difficult and more costly to catch, contributing to 20 percent of the quota remaining unharvested last year.��
Wholesale prices for red king crab are highly dependent on size. Large red king crab can fetch wholesale prices over $20/lb while smaller red king crab sections wholesale for $10-$11/lb. Wholesale prices for medium-sized red king crab (14-17 count per 10lbs) have fallen just over $3.00/lb since the beginning of the year and currently sell for $14.90 to $15.30/lb (FOB Seattle). Given the increase in supply - due to increased Russian IUU king crab fishing mentioned above - this declining price trend is not surprising (prices usually fall when supply increases).
Last year Alaska fishermen received $8.96/lb for shoreside deliveries of red king crab, before adjustments and bonuses. The 2011 Commercial Operators Annual Report (COAR), which includes these adjustments/bonuses, showed that the average ex-vessel value of all red king crab harvested in Alaska was $10.57/lb in 2011.
As TACs have fallen for red king crab, supplies of golden (or brown) king crab have become more important. Ex-vessel prices for golden king crab increased in 2011. The COAR pegged the average ex-vessel value of golden king crab at $4.99/lb in 2011 versus $3.57/lb in 2010. It is important to note that relatively small amounts of brown king crab are also harvested in Southeast Alaska and these crab are included in the data covering the golden king crab fishery.
According to the website Seafoodnews.com, contract prices offered by Trident Seafoods to Japanese packers for new season Alaska red king crab are down 25 percent this season versus last year. Although wholesale prices are down, Urner Barry Comtell reports active trading at current price levels and estimates that overall king crab supplies range barely adequate to fully adequate to cover active to fair demand. In addition, Urner Barry Comtell reporters note that smaller red king crab sizes and the golden king crab market are seeing tighter supplies for active demand. ������
Bering Sea Snow Crab
The Bering Sea opilio (snow) crab fishery opened October 15th and runs through May 15th, but most crab will be harvested in January and February. The mature male biomass (MMB) of Alaskan Bering Sea snow crab is over 300 million pounds and the acceptable biological catch (ABC) is 134.5 million pounds. Fishery managers have set this year���s TAC at 66.35 million pounds, well below the ABC. Individual Fishing Quota (IFQ) holders will be allowed to harvest 59.72 million pounds while Community Development Quota (CDQ) groups will be allowed to harvest 6.62 million pounds.
Bering Sea snow crab TACs may be down 25 percent this year, but 2012/2013 still ranks as the second-highest TAC during the past 14 seasons. TACs are based on summer survey trawls which are used to estimate the biomass of the stock. Recent surveys revealed the number of mature male crab with a carapace over 4 inches had declined by 28 percent.
A declining biomass for mature males was no surprise to members of the Council���s Crab Plan team, which coordinates crab management between the National Marine Fisheries Service (NMFS) and the Alaska Department of Fish and Game (ADFG). SMIS staff recently spoke with Crab Plan team member Doug Pengilly (also an ADFG biologist). Mr. Pengilly explained prior survey data indicated that recruitment (of younger crab ���growing��� into a size suitable for the fishery) was expected to decline this year due to weaker numbers of younger age classes entering the fishery. He added, ���Snow crab can take seven to ten years to recruit or grow into the fishery and the age-class data from surveys in prior years indicated there was some poor recruitment coming.���
Snow crab prices remain at historically high levels, as shown by the chart below. Prices for larger-sized Newfoundland snow crab are used a proxy because in most years they are traded more frequently than Alaska snow crab ��� providing a more continuous price trend. Wholesale prices for clusters of Newfoundland snow crab (8oz and up) are averaging $5.63/lb this week, or $0.65/lb lower than the same period last year. Currently, Alaskan snow crab clusters are selling for $5.25 to $5.75 per pound on the wholesale market (FOB Seattle).
Despite lower wholesale prices, the snow crab market has been trending up recently. Prices for Newfoundland product have increased $0.59/lb since August. Urner Barry Comtell reports, ���The current undertone is improving��� and ���Supplies range adequate to barely adequate for an active to brisk demand.��� With king crab supplies falling in recent years (although 2012 may reverse that trend) and China becoming a more active buyer, U.S. buyers have likely been placing a greater focus on snow crab as a crab product which can meet a certain price point.
Last season, fishermen received $1.89 per pound for shoreside deliveries (before adjustments or bonuses). Price negotiations for snow crab will not take place until early January, and much can happen in the marketplace between now and then which can impact prices.
*The most recent stock assessment and fishery evaluation (SAFE) report for the King and Tanner crab fisheries of the Bering Sea and Aleutian Islands Regions can be downloaded here. This document contains much more detail regarding crab TACs, biomass, and survey data.