Opinion Page
SKIPJACK - JUST A NORMAL YEAR ? !
With skipjack prices exploding by 300% in just 4 months,
we are seeing again a totally new phenomenon in the global tuna business. It is hard to
believe that a market can rise at such a rate, and it has surprised just as many of us, as
at the time when the market plummeted to USd 300 levels and staid there quite some time.
There has been hope that the market would recover, but nobody could have anticipated it
would be at this rate. It is the canned tuna packers worst nightmare ! Last year they took
a heavy beating through the depreciations of their frozen tuna inventory, this year they
are caught by surprise, are now facing heavy losses due to lack of raw material stocks and
cost prices more then doubling for uncovered orders.
So is 2001 such an abnormal year ? No,...Just a Normal Year. It was 2000 which was totally
crazy, which has blurred the perception of many canned tuna buyers of what is
"Normal". Some are experiencing a cold turkey from the hallucination that prices
below USd 500 p. M/T were going to be "normal" and stay longer, and have a hard
time facing the rate of recovery that this market is showing to becoming a normal tuna
year. It's like walking out of the darkness into bright sun-light, we just need to blink a
few times to adjust, to get the right focus on what's happening around us.
When we analyze history what we are seeing today, is almost a deja-vu. The only remarkable
thing has been the incredible speed of recovery of skipjack prices from Dec 1st 2000 to
the end of February 2001. From then on the price trend has not been so unique at all.
People who say that prices of USd 950 are unrealistic, may have lost touch with the
historic reality themselves.
We tend to forget that 1997 and '98 were dramatic meagre El Nino years, and that '99 and 2000 experienced the abundance of La Nina catches throughout the Eastern and Western Pacific. And now finally with the last symptoms of La Nina fading away, the U.S weather service is telling us , we are getting closest to a "Normal Year" in the weather patterns.
With a strong expansion of the global tuna fleet over the last two years, and many more, bigger boats on the ocean looking for fish, the reports of disappointing catches have more impact. More troubled fisherman are anxiously looking for a way to compensate their losses, and with more getting disappointed, catching looks worse then it really is. The reduction measures and agreements within the WTPO, and approved information exchange between major fleets, will help fisherman this year to go back to more normal fishing behavior, instead of the excessive fishing efforts we saw part of 1999 and 2000. I also believe that current catching is less then average. But they are especially very much down from the record-size abundancy of skipjack we experienced during the last two years. That abnormal over-supply with ultra-low prices we have gotten used to ! It takes a few blinks to adjust.
Like any normal year, history tells us, we might experience downward price adjustments during the months of May and June, when catches tend to be quite good in some parts of the Western Pacific. No reason for fear or panic about a potential market collapse. Demand is getting more balanced again, European and American buyers are re-entering the market this month. So like any normal year raw material could weaken somewhat by $ 50 to $ 150 dollars over the next two months, but that's only "Normal" !
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