SKIPJACK FISHING 2000 : LIVE OR DIE !

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SKIPJACK FISHING 2000 : LIVE OR DIE !
By Henk Brus (Oct. 26, 00)

During the recent SIAL Food Fair in Paris the past week, many professionals trading canned tuna met, and exchanged thoughts about which way the tuna market should move. Almost all canned tuna processors are looking for some sign of improvement in this terrible situation. Although confidence has been rising over the last few months that skipjack could recover to a level of about $500, the last two weeks hopes have started to fade.
They point out two major reasons for pessimistic views:

- Fishermen in Taiwan, USA, and Philippines promised to reduce drastically, but several buyers say they have serious doubt if these purse seiners were going to stick to previously made agreements. The fact that both Spanish and French seiners continue fishing at normal capacity, shows buyers that fisherman will continue to oversupply the market.

- The stock levels in the States are just far too high. Starkist is rumored to have abt 6 months of stock of finished (canned) product, Bumble Bee 3, and Chicken-of-the-Sea 3 to 4 months. Europe is also heavily stocked, although to a lesser extend.

The combination of these two factors, motivated one major buyer to announce that he would start bidding for Skipjack at US$ 300 per M/T CF BKK 1.8 kg up for delivery November and December 2000. I found his motivation harsh but understandable." If tuna fisherman are not willing to stop 100% NOW, we will have to make them stop", "we will have to put it straight to them : Live or Die !!". Skipjack buyers, processors, and importers are all holding fishing companies fully liable for the tuna market depression that they find themselves in, and their patience has ran out. It is indeed impossible to comprehend why fishing companies would continue to sail. Buyers point at the uncontrollable hunters instinct, or at the pressure of the banks to pay off the loans. But after having gone through it all, nobody can find any common sense in why companies go out to fish for $ 350 landed per M/T ? With diesel prices going through the roof, most probably their diesel bill per ton of fish, will be close to that they get for their fish. This is commercial suicide for the industry, for everybody involved.

But this is perhaps just what some leading fishing companies want to accomplish. Also they seem to be thinking : "We Live and They Die". There is a consensus among the larger operators that many smaller or weaker tuna fishing companies have to go. The big boys seem to be ready to play it hard to the end. Some say that if raw materials have to drop again to eliminate some of their competitors, and to make this business healthy again, that is what they will have to do ! It's down to the very basics again: Survival of the Fittest !

REACTION :

Dear Mr Brus

You certainly wrote a great article on Live or Die. Certainly packers were trying their best to increase finished product - FOB prices about a month ago but it was too premature. Offers did not get any response from the retail buyers. Seems that they have heard this before and are not going to bite. More interest seem to be moving toward yellowfin tuna. My guess is that buyers wanting to distance themselves from the skipjack - Chunk Lite and differentiate it with a label that spells out "Yellowfin". Unfortunately supply is low and prices of raw material high. Albacore is in the same boat. What next. In the US there is not much concern or anxiety over single or double duty. Clear indication that people have the attitude that prices will be low. I am guessing that when prices "really" move up , it will be a hop skip and a jump. You are certainly right, I think some of the the better financed companies are really looking to see their competitors sink. On the other hand , I am guessing that the branded boys are taking the opportunity to pick and squeeze which ever packer would like their business. I would liken the The Tuna Conference in Bangkok with the SIAL. Snooping and listening, estimating stocks and then bidding packers to the bone. Prices will go for another round of decline I believe as there is certainly not going to be much purchases between now and year end.

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