How much are people willing to pay for scallops? If a reported additional quota cut for U.S. fisheries is enacted for the 2014 fishing season, we may find out.
Talk of another quota cut, following the 30 percent cut ordered for the 2013 season that removed some 20 million pounds of product from the market, could leave the fishery with half the amount of product it had two years ago. The 2013 cut led prices to record levels of more than USD 14 (EUR 10.39), and a further cut could add another USD 2 (EUR 1.48) per pound to the price next year, says the CEO of one scallop supplier.
“They’re talking about more severe cutbacks next year from this year. If that means higher prices, God knows what is going to happen, whether people will eat them at that point,” the CEO said. “We’re starting to see resistance in New York now, and we’re also starting to see some European customers that are moving on from Atlantics to the Japanese. It’s an alternative but the Japanese are ready to start raising their prices, too, they’re not far off.”
While reports have some buyers trying to stock up now while prices are comparatively low to what they likely will be next year, the CEO is not doing that, as he is not sure buyers will be there at more than USD 15 (EUR 11.13) or USD 16 (EUR 11.87).
“Toward the end of the year we’ll bring in some of the 2014 but I wouldn’t gamble a lot on that. I wouldn’t want to be the guy holding a lot of product when no one wants to buy it anymore,” he said. “We’ll keep a couple of loads and hope that someone wants them, but I wouldn’t go further than that. I think it will go higher, but the question is, will it annihilate the market, will it reach the ceiling? As I keep getting older I’m finding out I don’t have a good memory and I keep thinking things are USD 5 (EUR 3.71) a pound. It’s just another new normal but I can’t get used to it.”
Prices in early October for IQF dry scallops from U.S. waters were in the low-USD 13 (EUR 9.65) range for 10-20s and 20-30s to more than USD 14 for U-10s. Processed domestic scallops were in the high-USD 9 (EUR 6.68) range to more than USD 10 (EUR 7.42), while Canadian product was running between the high-USD 9s to the high-USD 12s (EUR 8.90). Chinese scallops were in the mid-USD 3s (EUR 2.23) to USD 7 (EUR 5.19), depending on size.
With his customers buying only on an as-needed basis, the CEO says he’d rather pay more next year than try to game the market now.
“I’m just being more cautious. Last year and the year before I could rack up new orders into the New Year, now everyone is taking more time, they’re waiting until they are almost out of inventory. Then they’re thinking long and hard about what their position will be and they’re buying considerably less going forward on speculation,” he said.
If he were buying in today’s market, the CEO says he would be paying close to USD 12, and he doesn’t feel comfortable having people buying it from him for around USD 12.70 (EUR 9.42). “Nor would I want to invest USD 12 to get back 3 percent either, that’s not a very smart game,” he said.
