Strike. Market correction. Product shortfall. Pick any one, two or three of those scenarios, since any combination may emerge when the Canadian snow crab season kicks off.
Set to start as early as 1 April, a fast getaway to the season may not be the case. Fishermen unhappy with what they felt were low start-of-the-season prices last year that later jumped about USD 1 a pound could clash with processors unhappy after losing money.
“You’ve got the processors basically putting their foot down after they’ve had a couple of years where they’ve actually lost money, which is something nobody wants to do,” said the CEO of a large U.S. importer that deals heavily in crab.
“It’s high-stakes poker for both the fishermen and the processors. Processors who need to keep their plants going have a vested interest in being able to come to some sort of resolution, and fishermen have a relatively shorter window of harvesting the product. It’s kind of a game of liar’s poker where everybody is waiting to see who is going to fold first.”
That means the possibility of no fishing, as was the case a few years ago when a lockout kept boats tied up for more than a month. The CEO said a strike is again possible, though the availability of Alaska snow crab will keep it from crisis status. “It’s likely we’re going to see at least a short delay at the start of the season until prices get settled out,” he said.
The market lately has been challenging for 5-8s out of Alaska, the CEO says, calling it a “flagging of the product.” With the Canadian harvest expected to be smaller than average, and three-quarters of it in the 5- to 8-pound size range, and no sign of interest yet from the Japanese, who last year were big buyers of Canadian product, it looks like there could be a surplus.
“Just about everyone I speak to thinks there’s going to be more of a spread between the 5-8s and the larger sizes, 8-ups, 10-ups, 12-ups. On the conservative end, it could be about a half-a-buck, it could be as much as 75 cents or 85 cents a pound,” the CEO said. “All it’s going take is one or two customers reading the tea leaves and making a switch in sizes, that would really change the dynamics, even on the fly, as commitments changed. It’s a year where there is going to be a fair amount of fluidity.”
He expects 5-8s to go for USD 4.50 (EUR 3.45) to USD 4.75 (EUR 3.64) to start the season, less than the mid-USD 5 for Alaska 5-8s, f.o.b. West Coast in mid-March. Whether the price for Canadian crab goes up or down, and by how much, is anybody’s guess, the CEO said.
“You’ve got a situation where there could be a market correction of that price by as much as USD 1 (EUR 0.77) a pound; that’s where the poker game is,” he says. “Do you risk being out of stock or do you risk having an inventory loss of a dollar a pound? That’s going to be the knuckle-biting scenario for the next month or so.”
The CEO says he’ll jump in at the start to make sure he has product in his freezer, but he won't “aggressively work to fill our pantry or promote product” until there is market stability. His challenge? “Our customers can buy 50 cases at a time, we need to buy a truckload. Every container purchase is a roll of the dice. When you’re in the game, that’s the way you need to play it.”
