The international Skipjack market seems to be coming to a turning point. It has remained weak as buyers of packed tuna wait, trying to guess when prices have hit bottom. This could change very soon, and once it does prices could jump up fairly rapidly.
When raw material prices started dropping from their high of $2350-$2400/MT in Bangkok, buyers took a “wait and see attitude”, not wanting to be caught holding expensive product in a market where the bottom was falling out. This has caused a circle of weak sales of packed tuna, causing packers to buy less raw material from fishing companies, who then lowered their prices several times, resulting in still lower prices of packed tuna. This, in turn, reinforced the sensation that the bottom was falling out of the market, so buyers continued to wait.
Packers have a large inventory of packed goods, as well as of refrigerated raw materials in stock, with more on the way. But, there is also a great deal of repressed demand of buyers waiting for the right moment to jump, once they consider that prices have hit the bottom.
Present Bangkok raw materials offers are $1250 – $1300 / MT for March deliveries, seemingly heading towards $1200/MT. This price level is near the break-even point for most fishing companies, with rumors of some companies halting fishing until the market moves up, and some having diverted skipjack to the Eastern Pacific in an effort to lower the supply to Bangkok and so stabilize the market.
A key factor over the next few weeks could be the catch rates, as a strong catch could bring prices to the $1,200 range. But, fishing in the western Pacific has reportedly slowed and, if so, this could help stabilize the market.
On the sales front, Bangkok packers report a recent surge of demands and orders from the US, Canada and the Middle East, and so feel the market is reaching a turning point and will soon go up.
The recommendation is to monitor prices closely, and place orders immediately when they firm and/or start going up.