Snow Crab Market Update as of April 7, 2020

Snow Crab Market Update as of April 7, 2020

The following is a summary of general snow crab market information as provided by the provincial government and listed in various trade articles and the Urner Barry price index.

Pricing Update for NL snow crab

Given the current COVID-19 pandemic, the crab market is uncertain. The Urner Barry Price Index puts out a “Closing Commentary” at the end of every Tuesday and Thursday when prices are listed. For the past several weeks, the same commentary has been repeated:

The overall undertone across the frozen crab complex remains unsettled and mixed. Sales are reported to be light. Market participants report they are monitoring the market situation closely as it pertains to the COVID-19 pandemic.

There has not been a new market price for snow crab since February 25, 2020. There will likely not be another until the fishing season opens.

Inventory

There is currently no inventory of snow crab in either US, Japan, or China.

Retail Market 

The retail market in the US is reportedly strong, in a general sense, though it remains unclear what exactly this means for the snow crab market. Price offers for snow crab are in the low $7.00 USD range. To put this in perspective, the market price last year was in the $8.50 USD range. With that said, the exchange rate is currently much better this year than last.

The demand for snow crab at the current price level is reported to be strong. However, the depth of this demand is uncertain. If the retail market becomes flooded, prices will decline.

Foodservice Market

Foodservice operators in the US have said that they will be interested in purchasing snow crab once their businesses are back in regular operations. Unfortunately, no one knows when that will be. The foodservice industry has collapsed, with those who are still able to provide take-out operating at 10% to 15% of normal levels.

Long term it appears this critical market will rebound.

Update on the American Economy

The market for snow crab has a strong relationship to the overall US economy. For 12 years the US enjoyed strong economic growth and during this time snow crab prices have tripled in price.

The U.S. economy is not in good shape. The COVID-19 crisis has led to massive layoffs and unemployment levels may rise to Great Depression-levels. No one is certain when the COVID-19 crisis will subside and economist are now predicting that the U.S. economy will struggle to bounce back once people are able to go to work. Please keep in mind that this is just a prediction and the situation could change for the better.

Currency

After jumping as high as $1.45, the exchange rate has settled back down over the past 2 weeks to the $1.41 level. This is still 8 cents better than during the 2019 negotiating period.

Key Concerns for 2020

The two biggest concerns with the snow crab market for NL harvesters are:

• Creating a fair pricing system that ensures that the price to harvesters is in line with the value of snow crab in the market.
• Protecting the value of our snow crab industry for future years.

COVID-19 Update for Key Markets

There is reason to be cautiously optimistic about China. New daily COVID-19 cases have been below 100 for three weeks and some of the restrictions on movement and businesses have been relaxed. China is facing the challenge that every country will face when the crisis subsides: how to avoid infected people from traveling to your country and starting a new outbreak. The solution that China followed was to ban non-Chinese from entering for a period of time. That ban will have an economic impact.

China is also showing the challenges of restarting an economy. They are moving slowly to avoid another outbreak, which also means that the economic pain continues. Barring another outbreak, China will bounce back, but it will take time.

In Europe, the number of people infected daily has declined in Italy, Spain, and Germany. This decline should be placed in proper perspective, as the daily infection rates in these countries are still higher than the worst days of the Chinese outbreak. In France and the U.K., infection rates remain high – in the 5K per day range. A major outbreak is also occurring in Russia, where infections were 200 per day in late March and are now 700 a day in early April. Suffice to say, the situation is Europe is not positive.

The struggles in the U.S. are well-publicized. COVID-19 is not under control in the country and is slowly becoming a major issue in every state. This will remain a crisis in the U.S. for some time.

With the exception of a few countries – South Korea, Australia, Norway, and China – COVID-19 infection rates remain high or on the rise in the rest of the world. This will no doubt be a challenge for all our fisheries for 2020.