PNA: World market skipjack tuna price will rebound
Majuro — Prices for skipjack tuna on the world market have plummeted since hitting an all-time record high of US$2,350 per metric ton in mid-2013, and now however is US$1,200 per metric ton range.
But, the Parties to the Nauru Agreement (PNA) see skipjack prices beginning to rebound over the next few months because PNA members have agreed to reduce the number of fishing days available to the industry, and the current over-supply of fish on the market that is keeping prices low is expected to end in the near future.
The eight PNA nations that control waters where 50 percent of the world’s supply of skipjack is caught held their annual meeting earlier in March, agreeing to reduce the number of fishing days and redefined “non-fishing days” to eliminate loopholes used by fishing companies to the detriment of island interests.
“One of the key outcomes of the annual PNA meeting was agreement to tighten the definition of ‘non-fishing days,’” said Dr. Transform Aqorau, the CEO of the PNA based in Majuro. The redefinition of non-fishing days coupled with agreement to reduce the overall umber of fishing days each PNA member can sell this year through 2016 will place a premium on fishing days in the central and western Pacific, said Dr. Aqorau.
“This will affect the skipjack tuna supply,” he said. The announced reduction of fishing days available to Asian, American and European purse seiners has already produced a hike in the base purchase price.
PNA set US$6,000 as the minimum fishing day fee in 2014. But just three months into the year, some fishing countries have already used up more than half a year’s worth of fishing days, and this is driving up the price of fishing days for purse seine operators. “The Marshall Islands sold fishing days for US$7,000 last week,” said Dr. Aqorau. “The demand is there.”
While most observers believe the world market price of skipjack will drop further in the short-term, Dr. Aqorau sees the global price flattening out and then rebounding as stocks on hand decline and the effect of the fishing day reduction kicks in over the next few months.
“I expect the world price to go down further,” he said. “But it will be interesting to watch the next couple of months as the vessel day scheme tightens supply. The price will likely plateau and then start going up.”
Skipjack prices are now about US$1,200 landed Bangkok and are expected to decline further in the near future because the market is still weak and buyers are exploiting the situation. Despite the dramatic drop in global market price over the past year, the returns for purse seine fishing vessels is still well above the break even point.
This downward trend in tuna prices has come about for several reasons, including continued poor market demand in the United States, and significant regional differences in pricing based on local supply and demand in each regional fisheries management organization and processing area.
January to April, 2013 saw skipjack prices in Bangkok significantly higher than Ecuador and Seychelles. But oversupply in the western and central Pacific coupled with good skipjack fishing in other regions saw buyers benefit. Orders to Bangkok, normally the price setter for the world tuna market, slowed as Ecuador offered lower prices for tuna. Bangkok prices dropped as tuna suppliers lost contracts to South American suppliers, and have not yet rebounded.
Compounding the problem of skipjack oversupply, PNA waters produced high tuna volumes during the second half of 2013, despite an annual four-month fish aggregation device (FAD) closure from July-October.
The FAD closure had less impact than normal and instant high catches on the first day of the FAD opening saw supply continuing to exceed the current depressed demand.
A high volume of unusually small fish of low commercial value coupled with good fishing in the Atlantic added to the oversupply and low market price last year.
PNA sees this downward trend unlikely to change in the next couple of months.
“Each PNA country has agreed to reduce their allowable effort, which will definitely impact the supply of tuna,” said Dr. Aqorau. This will increase scarcity and introduce a measure of uncertainty in the market, which will drive both the fishing day fees the PNA nations are charging as well as the global market price for tuna,” he said.