With not much carryover inventory, a lower salmon harvest forecast and high farmed salmon prices, experts in the Bristol Bay wild salmon industry predict higher prices and strong demand this year.

Norm Van Vactor, CEO of the Bristol Bay Economic Development Corporation, which owns 50 percent of seafood supplier Ocean Beauty Seafoods, said companies are switching away from canned salmon.

In Bristol Bay, where 96 percent is sockeye, canned salmon was the norm for many years because high volume was landed in a short period of time," he told IntraFish.

"Also there was demand for canned salmon," Van Vactor said. "This has historically been the case for decades. The last 30 years has seen a slow transition to more and more frozen production. 

"That all changed two years ago, and since then the pace of converting from canned to frozen has been fast and furious, with frozen now dominating," he said. 

This major shift started in the last few years with a big shift last year.

"A few companies who always did canned salmon silenced their canning lines and installed frozen fillet lines. Some companies, instead of jumping straight to value-added, are taking the first step by just going to H&G," he said, adding some companies will switch from 18 hours per day canning to committing 24 hours on their frozen lines with the same manpower or, in some cases, less. 

However, it's been difficult for companies to find employees -- especially from the United States, to work in this field -- which created hardship for processors. 

"Most of industry, though, is working through it."

Alfredo Ovalle, president for Seacorp Seattle, a seafood management company in the United States, is also seeing the switch away from canning.

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"Things are getting a bit interesting. [Last] week, we started to hear that the canners will be standing down this season in Bristol Bay," he told IntraFish. "If this is the case, we will see a flux of 2/4 come to market. 

"Current market in the US for 4/6 H&G has been trending towards $4 (€3.59) per pound, and many Alaska packers are advising potential frozen customers that they will have to get a better return than fresh before they start freezing."

The McDowell Group's sockeye report said it expects processors to prioritize fillets and H&G products over cans this season as well.

Van Vactor estimated last year about 30 to 35 percent of Bristol Bay salmon was canned and he speculated, "I wouldn't be surprised if this year it’s under 10 percent for canned salmon out of Bristol bay."

Carryover inventory

One factor impacting the demand and prices this year is the carryover inventory, or lack thereof.

"Canned salmon inventories are very low going into this year and frozen is virtually non-existent," said Van Vactor. "Packers are still managing inventories to have supply though ... When you have trade labels, companies don’t want to give up shelf space. 

"A lot of companies manage inventories so that they’re nearly out, but manage it so that they don’t run out completely," he said. 

The McDowell report also suggested there's nearly no frozen sockeye inventory headed into this season, which will help create "strong demand" for sockeye.

"Low carry over inventories from Alaska will stimulate the fresh market for a majority of the season," said Ovalle. "The big question now is how much air lift and freezing capacity will be available from Alaska."

Van Vactor was also hopeful fresh demand would pick up.

"One of the hopes is that there will be strong demand for fresh -- which we’re seeing in the States. If fresh salmon is being consumed, the frozen product form doesn’t have to compete with it. 

"There's only a limited amount of lift capacity for fresh salmon, such as cargo planes, and there's significant weather variability out here," he said. "Last year, not many fresh deliveries were curtailed by weather out of Bristol Bay, but it can happen."

Bullish market?

Van Vactor told IntraFish the market conditions are strong, particularly the domestic market.

"It's a bullish market. Prices are high now with the start of the season and low inventories as well as strong farmed salmon prices, but that may stabilize later as more supply enters the market, but we just have to see how season plays out," he said. 

"We like to think we can stand on our own two feet, but there are several factors impacting the market, such as supply/demand and farmed fish. Farmed fish prices have been strong and wild salmon may follow that trend."

He added exchange rates are only OK right now and they're seeing demand in the international community, but "it could be better though."

"Exchange rates for countries purchasing sockeye have weakened compared to last season so I’m not sure if high Alaska prices will be accepted by global buyers," said Ovalle. 

"As for demand, we know that Japan has made their bed with coho at $6.50 to $7 (€5.83 to €6.28) per kg, so Alaska would have to be at the $3.60 (€3.23) per pound level to maintain the traditional $1 (€0.90) per kg spread between sockeye and farmed coho [Alaska packers are definitely pushing for higher returns]."

Andy Wink, seafood analyst at McDowell Group, told IntraFish, "sockeye prices will likely be higher this year, which is due to the expectation of a smaller sockeye harvest."

He said he hopes retailers and distributors could provide more information to customers explaining the higher prices.

"It’s important that we don’t lose a lot of buyers just because prices go up a bit only to have to go through this whole cycle again in a few years," he said. "We have healthy stocks in Alaska and excellent management practices, but some years species are up or down, and this year looks like an average-ish sockeye harvest after a couple big years. 

"I think if customers can be made aware of that it would be a good thing."

Hoping for steady volumes

"One of the advantages we have in Bristol Bay is higher volume but it can happen very fast," said Van Vactor. "I hope it spreads out so that processors can put salmon in the best product form and into the best markets."

The Alaska Department of Fish and Game (ADF&G) detailed harvest data for the five Bristol Bay districts projecting declines in most of the regions compared with last year's harvest. 

The commercial salmon season in Bristol Bay opened June 1 with a total projected sockeye harvest of 27.47 million fish.

Van Vactor said the forecast is a decent prediction, and although it's less than last year, "that's OK because it's still a high forecasted volume. When they predict a huge year, it has a dampening effect on potential value."

"I just hope the run shows up in an orderly fashion and spreads out. We hope it’s not all in a compressed into a two-week period."

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