1

Coldwater Shrimp Market Analysis for 2019

John SacktonSeafood Datasearch

March 25, 2019

2

Background• 40 Years in Seafood Industry

• Crab, shrimp and lobster

market analyst since 1997

• Preseason price and market

outlooks on shrimp, crab,

lobster – Atlantic Canada,

Alaska, and US West Coast

• Price arbitrator for Alaska crab

• President of Seafood

Datasearch Market Consulting

• Co-Founder of NFI’s Global

Seafood Market Conference

• Publisher of Seafood.com News

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How to Analyze Seafood Markets

TheQuestiononeveryone’sMind:

Whatwillbethevalueofshrimpthis

season?

Factorstogetatananswer:

LocalandGlobalSupply

MarketDemand

CompetitiveProducts:

(volume;productform,substitutes)

ForeignTrade

ChangessincelastSpring

Over the next 45 minutes we will look in depth at these factors

4

The global coldwater shrimp supply trends have stabilized

• GlobalLandingsofPandalusshrimphavestabilized,andmayincreasein2019

• Largelyduetomorefavorabletemperaturefactorsandinteractionswithcod

• SingleFrozenCookedandPeeledproductionwillnotgrowasmuchasoveralllandingsduetoincreasedfreezertrawlersinBarentsSea.

• Canadianinshoreproductionmaybestabilizingatalowlevel.

5

Global Pandalus Production

0

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Est

LandingsofPandalusShrimp

Canada US EU Norway Iceland Sweden Russia Greenland

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Shrimp and Cod

• Codstocksdecliningoratplateau:

• BarentsSea• Canada• WestGreenland• Result:morefavorableenvironmentforshrimp

Dr. Carsten Hvingel has madethe connection between shrimp and cod at ICWPF

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Global Pandalus production will stabilize and begin to increase

• BarentsSeaisprimaryexample.• InCanada,shrimpandsnowcrabstockshaveincreasedanddecreasedtogether.

• Althoughatlowlevel,latestsurveysshowsomesignsofareturntoamorefavorableenvironmentforcrabandshrimp.

• IntheGulf,thelargestockofredfishmaybecomeafactorinshrimpabundance

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Pandalus Cooked and Peeled Production

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Est

MetricTons

EstimateofSingleFrznCookedandPeeledLandings

Canada US Norway Greenland25%

9

Changes in C&P AvailabilityRole of Twice Frozen

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Est

MetricTons

SingleFrozenCookedandPeeled FrozenatSea

RussianBarents sea Quota is up 20,000 tons In 2019

10

US Production of Cooked and Peeled

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2014 2015 2016 2017 2018

CPProductVolum

e

AxisTitle

USProductionofCookedandPeeledJordaniShrimp

Fresh USFzn Exports USLandings OregonLandings

Landingsvolume

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Canadian Production of Cooked and Peeled

0

5,000

10,000

15,000

20,000

25,000

30,000

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Est

MetricTonsC&PProduction

MetricTonsLandin

gs

CanadianCookedandPeeledProduction

C&PProduction CanadaOffshore CanadaC&P

Offshore landings

Inshore landings

C&P Production (right scale)

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Discussion of C&P volume

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2017 2018 2019

LandedWeightforC&PRawMaterial

ExpectedRawMaterialforC&P

US Canada Norway GreenlandInshore GreenlandTwiceFzn

• C&P Volume Stable• US and Norway may

Increase• Canada Inshore

may decline in Gulf• Greenland should

be stable

It is not clear how much industrial twice frozen C&P willbe produced, as this depends on market prices and demand.However more fishing in Barents Sea will lead to higher factorytrawler production.

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Market demand and supply appear relatively balanced

• Mostpriceshavebeenstableoverthepastfewmonths,suggestingabalancebetweendemandandsupply.

• ThepricedifferencebetweenjordaniandP.borealisvaries,withsomeevidenceoflargervariationonsmallersizes.

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Pricing for East Coast Pandalus

2018 prices have stabilizedamong all sizes

Percent change in prices indicates period of weakness

in 2017 has ended

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Percent change in price P. borealis vs P. jordani 250-350

-30.00%

-25.00%

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Monthlychangeinpricingfor250-350P.borealisvsP.jordanipercentchange250-350UB 250-350westcoast 350-500WestCoast

300-500 jordani

250-350 jordani

250-350 borealis

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Price differential between East Coast Pandalus and West Coast Jordani

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

UB150-250 Jordani150-250 Ub250-350 Jordani250-350

YearlyAveragePricesBorealisvsJordani

2016 2017 2018

150-250 250-350

2016 -0.42 -0.42

2017 -0.35 -0.61

2018 -0.49 -0.66

average market price differential

In 2017 there was a sharp drop in pricing between March and May.According to industry sources, the quick recovery in Borealis was not matched by Jordani pricing, and it took until August before 250-350 prices recovered

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Iceland Twice Fzn to UK also shows period of weakness in 2017, recovery in 2018

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Jan-16

Mar-16

May-16Jul-16

Sep-16

Nov-16

Jan-17

Mar-17

May-17Jul-17

Sep-17

Nov-17

Jan-18

Mar-18

May-18Jul-18

Sep-18

Nov-18

Jan-19

Convertedto$USperLb

Iceland2XFznSalestoUK

100-200 250-350 500-800

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US exports to Canada and Denmark

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

UScoldwatershrimpexports

Canada Denmark CanadaPrice DenmarkPrice

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Canada (single fzn) and Iceland (twice fzn) Sales to UK

-

1.00

2.00

3.00

4.00

5.00

6.00

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

CanadaandIcelandtoUK

Canadalbs Icelandlbs Canadaval IcelandValue

CA $4.88Ice $4.50

Differential between once and twice frozen averages around $0.38 per lb

Differential between once and twice frozen of $.20 to $.30 acceptedDifference in price of $.60 to $.70 is not; more users switch.

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Market demand issues• Increasesinsupplywilllikelycomefromtwicefrozencookedandpeeledshrimp.

• Industrialshrimparegenerallysmallersizes,aslargersizesaresoldascookedonboardinshell.

• Iftwicefrozenmarketadjustsdownwardthissummer;willsinglefrozenfollow,orwillthepricedifferentialgetwider?

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Substitutes and competitive products for Cooked and Peeled

• Singlebiggestsubstituteistwicefrozenforoncefrozen.

• UKmarketbuysboth,withmorevolumeoftwicefrozenwhenpricesarefavorable.

• Danishbriningmarketrequiressinglefrozenproduct.Highpricesforborealismaysparkmoreinterestinjordani.

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Other Shrimp is also a substitute but pricing shows little correlation

Trading bands

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Primary country of substitution is UK

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Oct-1

5No

v-15

Dec-

15Ja

n-16

Feb-

16M

ar-1

6Ap

r-16

May

-16

Jun-

16Ju

l-16

Aug-

16Se

p-16

Oct-1

6No

v-16

Dec-

16Ja

n-17

Feb-

17M

ar-1

7Ap

r-17

May

-17

Jun-

17Ju

l-17

Aug-

17Se

p-17

Oct-1

7No

v-17

Dec-

17Ja

n-18

Feb-

18M

ar-1

8Ap

r-18

May

-18

Jun-

18Ju

l-18

Aug-

18Se

p-18

Oct-1

8No

v-18

Dec-

18

coldwater warm water

Holiday Sales

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US Shrimp Market is very healthy

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Retail sales increasing

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Foodservice sales of shrimp up alsoFoodservicesawaveragepricesdropduringtheyear

Althoughcoldwatershrimpisnotbrokenoutproperly,westcoastsaleswereup

Coldwater shrimp benefits from theoverall strength of this market

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Global Trade Summary• Coldwatershrimpisthelargestshareofwildcaughtshrimp,representing36%ofglobalshrimptrade.

• TheUKandDenmarkremainthelargestmarketsforcookedandpeeledshrimp,withDenmarkthemostimportantforeigntradingpartnerfortheUSandtheUKthemostimportantforCanada.

• ThenextincreaseinshrimpsupplyiscomingfromtheBarentsSea

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Canada38%

Greenland31%

UnitedStatesofAmerica9%

Norway7%

Netherlands6%

RussianFederation

6%

Denmark3%

Coldwater shrimp are 36% of wild shrimp trade

ColdwaterSpecies90% PenaeidSpecies:91%

104830

86002

24033

18697

India26%

China22%Indonesia

15%

Mexico12%

UnitedStatesofAmerica12%

Peru4%

Thailand4%

Australia3%

Brazil2%

200116

172262

118164

Wild 854.000Coldwater 308.1432016 productionArgentina red: 178.000

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US Exports

0

500

1000

1500

2000

2500

3000

3500

4000

4500

Denmark Sweden OtherEurope China Canada

USexportsofcoldwatershrimp

2011 2012 2013 2014 2015 2016 2017 2018

Note: there appear to be some exports to China in 2018.

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US has been the most consistent Market for Canada

Seafood Datasearch, Intracen

0

1000

2000

3000

4000

5000

6000

US UK Denmark OtherEurope Asia

CanadianexportsofC&Pshrimp

2012 2013 2014 2015 2016 2017 2018

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Total Canadian C&P Exports Declining as Catch Falls

Seafood Datasearch, Intracen

0

2000

4000

6000

8000

10000

12000

2012 2013 2014 2015 2016 2017 2018

Metrictons

Total

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Danish imports dominated by Greenland

0

10000

20000

30000

40000

50000

60000

70000

80000

90000

2012 2013 2014 2015 2016 2017

Greenland Canada UK US Iceland Sweden/Norway

As Canadian quotas decrease, Denmark makes up with Greenland

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Canadian exports of shell on shrimp

0

10000

20000

30000

40000

50000

60000

70000

2015 2016 2017 2018

MetricTons

Exportsofshellonfrozencoldwatershimp

China Denmark Iceland UnitedKingdom Japan Ukraine1 Morocco Bulgaria Albania UnitedStates(+ShowStates)

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2018 saw higher catches and pounds per trip in Oregon

35

West coast historical landings and yearly avg price

Pacfin Data

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

0.0

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0

45,000.0

50,000.0

2010 2011 2012 2013 2014 2015 2016 2017 2018

CoastWideLandingsandOregonPrice

Calif OR WA ORPrice

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Oregon Season summary from pink shrimp report: 3rd highest value

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Monthly count by poundWith bigger sizePrice differentialAnything to increaseOverall size ofCatch will be moreValuable thanUsual this year

2019 could see largersizes due to age 2 shrimp;Outlook is cautious

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Newfoundland Inshore Prices

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

2014 2015 2016 2017 2018

NewfoundlandinshorePricesspring summer fall

Similar to Oregon, Newfoundland inshore prices rose in 2018 over 2017

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Canada in 2019

• Area 4 & 5 may be down 40%; area 6 likely stable means about 9000 CP

from NL

• Gulf will be down substantially with 20% cut or more: 11,400 tons

• Nova Scotia unchanged.

Net estimate for 2019 is around 23,000 tons, a cut of 14%

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Currently six shrimp peeling plants operating in NL

• Processingcapacityiswaytohighforcurrentquotas.

• Someplantshaveaccesstotheirownoffshoreshrimpandcanproducetwicefrozen.

• EconomicsstillfavorsalesofCAoffshoreshrimptoIcelandfortwicefrozen.

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Biggest gulf reduction in Sept Iles – perhaps 35%

300m

50m

50m

450m

500m

150m

100m

50m

200m

350m

350m300

m

350m

200m

200m

100m

400m

50m

300m

50m

450m

250m

100m

300m

50m

50m

50m

50m

350m

250m

150m

150m

50m

100m

50m

100m

100m

200m

50m

300m

50m

100m

150m

150m

100m

50m

150m

100m

150m

100m

200m

300m

50m

50m200

m

50m

250m

250m

200m

100m

300m12

10

98

Matane

Shediac

Rimouski

Caraquet

Cheticamp

Sept-Îles

Mont-LouisBaie-Comeau

Blanc-Sablon

Les Escoumins

Rocky Harbour

Port au Choix

Port Hawkesbury

Tête-à-la-Baleine

Havre-Saint-Pierre

Sainte-Thérèse-de-Gaspé

Channel-Port aux Basques

Rivière-au-Tonnerre

Natashquan

La Romaine

Île d'Anticosti

Îles de la Madeleine

Rivière-au-Renard

P3

P4 P5

E6

E3

E9

E8

P6

E5

P1

E11

E10

E1

E2

E7

E12

E4

P2

E13

E14

U.S.A

New Brunswick

Prince EdwardIsland

Nova Scotia

Newfounlandand

Labrador

Quebec

57°0'0"W58°30'0"W60°0'0"W61°30'0"W63°0'0"W64°30'0"W66°0'0"W67°30'0"W69°0'0"W

52°0

'0"N

51°0

'0"N

50°0

'0"N

49°0

'0"N

48°0

'0"N

47°0

'0"N

46°0

'0"N

CanadaFisheries and OceansCanada

±Average Annual Landed Values ($)1

Shrimp1 - 5 0005 001 - 10 00010 001 - 15 00015 001 - 20 00020 001 - 25 00025 001 - 30 00030 001 - 35 00035 001 - 40 00040 001 - 45 00045 001 - 50 000> 50 000

1 Average annual landed values for shrimp fisheries between 2008 and 2015. Georeferenced and estimated values are presented on a 6.25 km² grid.

Shrimp Fishing Area Limit

Bathymetry

Coral and Sponge Conservation Areas and

Geographical Distribution of Shrimp Landings

1:2 800 000

0 50 10025km

Produced by Fisheries Management - Quebec Region, Fisheries and Oceans Canada, 2017-10-03Projection: NAD83, Lambert conformal conic Data sources: DFO, 2017Disclaimers: This is not a navigation map and does not constitute a legal tool. Contents are subjectto change and Fisheries and Oceans Canadacannot guarantee the accuracy of all theinformation presented in the map.

Approximate Scale

Notes:i The conservation areas are identified by the number of the corresponding significant coral and sponge area.ii The projection Canada Albers equal area conic (NAD83) was used to calculate the area sizes. iii Due to rounding, the total size differs slightly from the sum of the sizes of the individual areas.iiii The total size of the significant coral and sponge areas takes into account areas of overlap, which are only counted once.

Coral and SpongeConservation Areas

Conservation Area

Conservation Area Sizei ii:

E3 = 530 km² E5 = 346 km²E7 = 845 km² E8 = 939 km²E9 = 215 km² P3 = 496 km²P4 = 821 km² P5 = 1 284 km²P6-Nord = 335 km² P6-Sud = 423 km²P3-E6-P4 = 2 338 km² TOTALiii : 8 571 km²

Significant Coral andSponge Areas

Significant Area

Significant Area Size ii:

E1 = 1 002 km² E2 = 851 km²E3 = 2 277 km² E4 = 502 km²E5 = 1 546 km² E6 = 1 621 km²E7 = 753 km² E8 = 2 168 km²E9 = 2 262 km² E10 = 1 464 km²E11 = 2 008 km² E12 = 779 km²E13 = 587 km² E14 = 568 km²

P1 = 1 537 km² P2 = 470 km² P3 = 3 993 km² P4 = 3 482 km²P5 = 3 379 km² P6 = 1 649 km² TOTALiii iiii: 32 307 km²

Sponge areas

Sea pen areas

• OtherpartsofGulfmaysee15%reduction

• HitsQuebecveryhard• Quebecalsois

principalexportertoUSbecauseplantsdon’thaveBRCcertifications.

Sept Iles Anticosti

Net result: less Canadian shrimp to the US in 2019

42

Cold water shrimp Summary • Global Production of Pandalus Shrimp is Increasing,

especially in Barents Sea and Greenland• Most of this production increase will go to twice frozen

shrimp• Single Frozen cooked and peeled volumes will be lower in

2019 due to reductions in Canada, partly offset by increases in Greenland and potentially the West Coast.

• Cutbacks in the Gulf will mean more pressure on larger sizes, leading to an increased price spread by size.

• With favorable conditions, ie no return to El Nino conditions, shrimp biomass on West Coast should continue to increase.

• Overall prices have shown considerable stability• There is so far no evidence of demand for single frozen

cooked and peeled exceeding supply.

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Thank you

• TimeforQuestions