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ANNUAL LOBSTER MARKET REVIEW

ANNUAL LOBSTER MARKET REVIEW. John Sackton SeafoodNews.com MARCH 24-25, 2014 New Brunswick. Background. Crab, shrimp and lobster market analyst since 1997 Preseason price and market outlooks on shrimp and crab for 17 years – Atlantic Canada, Alaska, and US West Coast

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ANNUAL LOBSTER MARKET REVIEW

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  1. ANNUAL LOBSTER MARKET REVIEW John Sackton SeafoodNews.com MARCH 24-25, 2014 New Brunswick

  2. Background • Crab, shrimp and lobster market analyst since 1997 • Preseason price and market outlooks on shrimp and crab for 17 years – Atlantic Canada, Alaska, and US West Coast • Price arbitrator for Alaska king crab, snow crab annually since 2005 • Publisher of Seafood.com News

  3. INTRODUCTION

  4. LOBSTER 2014 • Low prices and ample supplies expanded the market. • Lobster tail prices have fallen steadily from 2011 until this summer. • For first time in five years, landings slowed this fall, and the smaller volumes led to a run up in prices • Chinese demand continues to be a major factor • sales of Nov-Dec lobster now continue right to the Chinese new year • Live market prices are volatile, having already peaked for this year. • In 2014 high prices will impact customer demand

  5. Are We Seeing the End of Low Priced Lobster • Overall demand has increased • Supply has stabilized, not increasing • More processing in Maine; competition for raw material • New markets for tails • New England retailers and restaurants • EU will get more Canadian tails and meat with no tariff • More substitution for shrimp, scallops

  6. Topics covered today • Review of supply situation • US Market • Other export Markets, including China • Recent price history and price issues • Outlook: What are some issues on the Horizon • Market expansion • Promotion • Lobster Aquaculture

  7. SUPPLY

  8. US Supply Continues at a High Level Imports from Canada Increased 3.5%; Mostly from Live

  9. Total US Imports Increased in 2013

  10. US IMPORTS OF LOBSTER BY SPECIES Source: Urner Barry and US customs data

  11. US LOBSTER SUPPLY WITH EXPORTS Source: US Census Data, Canadian Export Data, NMFS

  12. Global Supply of Homarus is Increasing FAO Fishstat database; 2011-2012 data are industry estimates

  13. HOMARUS LOBSTER LANDINGS DECLINED SLIGHTLY IN 2013 Source: FAO data plus estimates for 2012 and 2013 based on Canadian and Maine lobster councils

  14. LFA 34 had lower reported landings in 2013-14

  15. REASONS FOR DECLINE • Some LFA’s in Canada had strong or record landings, but bad weather this fall / winter and slow catches have meant lower landings in Nova Scotia, the largest single landings area. • Maine did not experience the glut of lobsters in 2013 as in 2012 but ended up at 126 million lbsvs 127.2 in 2012

  16. MAJOR TRENDS IN 2013 • More Maine processing capacity meant expansion of market for tails and meat – especially at retail in New England • Global landings of spiny lobster trending upward again; US Imports increased • China increased its imports of lobster over 2012 despite luxury crackdown • Volatility in pricing this spring may impact customers as costs for raw materials are up • We may have seen the end of low priced lobster

  17. US MARKETS

  18. US REMAINS THE LARGEST MARKET FOR CANADIAN LOBSTER NEW BRUNSWICK DEMAND IN US MARKET STILL MOST IMPORTANT FACTOR FOR CANADIAN EXPORTERS NOVA SCOTIA PEI

  19. US DEMAND HAS BEEN INCREASING BECAUSE OF LOW PRICES FOR PAST TWO YEARS • RETAIL • Expanded use of Frozen lobster • Walmart added 3 lobster items this year • Whole Foods increased promotion • Foodservice • Took Advantage of low priced tails • Used in competitive market position • Red Lobster helped by ‘lobsterfest’ in February

  20. US LOBSTER CONSUMPTION IS HIGHLY REGIONALIZED: 63% in Northeast • With change in laws regarding processing in Maine, more lobster tails, meat consumed in Northeast • Retailers offering tails as well as live lobster

  21. Retailers Doubled the number of lobster promotions in the US in Jan-Feb 2014 Retail promotions up 100% in Jan / Feb

  22. Lobster was seen as a value compared to shrimp and crab Source: Urner Barry Retail Database

  23. Lobster tails on sale at Whole Foods

  24. Changes in Massachusetts laws helped market • Massachusetts is one of the highest per capita consumption areas for lobster • Until two years ago, lobster could only be sold whole in many circumstances • Change in processing laws meant opening market to tails • Has had a big impact on volume of frozen tails sold in New England - especially from Maine processors

  25. Foodservice expanding as well • Lobster appeared on 35% more menus in 2013 than in 2012 according to data essentials, a menu tracking service • 2013Restaurants with lobster specials include • Golden Corral, Darden, Quiznos, dozens more • Based on 2013 tail prices: Golden corral bought 200,000 lbs at $13 per lb., a 20 year low price according to their buyer • Even Long John Silver’s featuring ‘lobster’ – although actually a Nephrops which the FDA allows to be called lobster

  26. Monthly Supply of live, meat and tails to US market Domestic produced tails and meat is still a very small amount Source: Urner Barry Lobster Insider report

  27. Price and Volume for Canadian frozen lobsterimports

  28. EXPORTS

  29. EXCHANGE RATE WILL BE HUGE FACTOR IN 2014: CANADIAN DOLLAR HAS WEAKENED

  30. BUT CA DOLLAR HAS WEAKENED EVEN MORE AGAINST EURO

  31. CHINA’S CURRENCY HAS WEAKENED AGAINST CANADA

  32. CURRENCY WILL MAKE US A VERY ATTRACTIVE MARKET THIS YEAR • The US is a better market for lobster exporters • In the past, being tied to US when the CA dollar was at parity was the kiss of death, now the movement is the other way • A weaker Canadian currency will also help exporters to Europe • It will not help sales to China, but with only an 8% swing in value, currency is not the major factor in whether Chinese buy more Canadian lobster or not

  33. GROWTH OF CHINA’S IMPORTS OF LIVE N. AMERICAN LOBSTER PROJECTED FULL YEAR 2013 YTD OCT Source: Global Trade Atlas, GTIS, China Customs

  34. CETA agreement will be major boost to Lobster Exporters

  35. New Brunswick Fzn Exports

  36. PEI Exports

  37. Nova Scotia Exports

  38. Export Summary • New Brunswick is seeing less exports to both US and Europe, China, although US shipments increased in 2013 • PEI has seen big gains In US exports – likely due to larger companies like Mazzetta and Red Chamber/Aquastar buying plants to serve US customers • Nova Scotia is seeing jump in live sales to both US and China

  39. PRICING

  40. Lobster tail prices began rising this summer Prices have Returned to 2011 levels Source: Urner Barry Comtell

  41. Long term picture of 4 oz tail price is mixed:Below PPI index; but at same level that caused market reaction in 2011

  42. US volumes have increased and prices are increasing also Source: Urner Barry

  43. Live Prices have come down from their seasonal peak

  44. What happened to tails and meat? CK 2 lbvac pack 4 oz tail

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