The Alaska Seafood Marketing Institute and the McDowell Group, a research and consulting firm in Alaska, recently released market reports suggesting a possible upturn in value for some Alaska seafood despite a strengthening American dollar.
According to the reports, the major factors affecting the value of Alaska seafood market exchange rates, market supply, market access and consumer demand. In general, as the dollar strengthens, the value of Alaska seafood decreases. A strengthening dollar forces foreign markets to pay higher prices in their respective currencies for the same amount of Alaska seafood. This typically leads to decreased demand for American goods and lower prices in denominated dollars.
As 60 to 70 percent of Alaska seafood depends on foreign markets, dollar value can have a major impact on its overall value. International trade agreements also play an important role, but are especially unpredictable at this time as industry professionals wait to see how policies develop under President Donald Trump’s administration.
Since 2011, the dollar value has increased from 76 to around 100. Andy Wink, a senior seafood analyst with the McDowell Group, said, “The last time we were at this point, when the dollar was this strong, we had a real crisis in the industry … We’re not quite back to that point yet in terms of inflation, but it certainly hasn’t been kind to us. The industry has seen a pretty significant downturn since 2011.”
Despite the fact that the dollar is expected to remain strong or to strengthen, there are some signs of an upturn in value for Alaska seafood. Wink especially points to the salmon market’s potential to bring in higher value in coming years.
While salmon values can vary widely across region, gear type, and species two factors suggest a general upward trend for salmon caught in Alaska, according to the McDowell Group report.
First, investment banks are predicting farmed production [of salmon] will not exceed 2015 levels until 2019, the report said. Farmed production is usually expected to grow every year, so when it drops or remains level it creates greater market demand for wild Alaska salmon.
Second, low harvest levels of pink and chinook salmon in 2016 will create upward pressure on the ex-vessel price.
King crab may also see some increase in value, the reports said. Final ex-vessel prices for the 2016 season are expected to be up 20 to 35 percent and should translate to an increase in the king crab fishery value of 10 to 15 percent – about $10 million to $15 million. Though the total allowable catch (TAC) was down to 14 million pounds in 2016 from 16.3 million pounds in 2015, fishing was actually better. Fishermen averaged 37.4 red king crab per pot compared to 32 crabs per pot last year. Better fishing could suggest a better biomass and thus a greater TAC in 2017. With high prices and the possibility for larger catches, the king crab market should remain strong.
Halibut are also seeing increased prices and increasing TACs. The overall value of halibut is down significantly because the TAC dropped significantly in the last 10 years, but the TAC is slowly recovering. The 2017 TAC for halibut caught in Alaska increased to 22.6 million pounds from 21.5 million pounds in 2016. Wholesale prices are also up slightly, suggesting strong demand despite the increased harvest volume.
Black cod, Pacific cod, and Alaska pollock markets, however, are seeing decreased values. Black cod prices are at record high levels, but at the same time harvest is at its lowest since the early 1980s. The increased price is not expected to completely off set the lower harvest. For both Pacific cod and pollock, both price and TACs are down.
This story originally appeared on SeafoodSource.com. It is reprinted with permission.