HomeIndustryMarket Outlook Positive for Southwest N.S. Lobster Fishery

Market Outlook Positive for Southwest N.S. Lobster Fishery

There are positive indications for favourable lobster market conditions as fishermen in Southwestern Nova Scotia get ready to set their traps at the end of November.

Healthy export markets, a strong U.S. economy, stable exchange rates and at least an average demand from processors are on the horizon for the fall start of the six-month fishery in Lobster Fishing Areas (LFAs) 33 and 34, said John Sackton, founder of seafood.com.

Sackton was speaking at the SWNS Lobster Forum in Yarmouth on Sept. 19.

“If the weather cooperates and the landings cooperate, I think we’re looking at a relatively healthy season in the fall,” Sackton told the several hundred fishermen in attendance.

Sackton spoke of U.S. trade issues and how they are impacting the North America lobster industry and gave an in-depth look at North American lobster landings and global market conditions over the past few years during his presentation.

“The U.S. trade policy disaster has been a gift to Canadian shippers,” said Sackton, helping to make Canada the preferred supplier for the Chinese market and reducing American competition.

As well, CETA (Canada European Union Comprehensive Economic and Trade Agreement) has made Canada the primary supplier to Europe, with the elimination of tariffs on live lobster and lobster products that started last year.

In 2017, Sackton said there was less Canadian frozen lobster going to the U.S., less live U.S. lobster going to Canada, more live U.S. lobster going to Asia and most significantly, U.S. landings were down in 2017 by 20 to 30 million pounds — a big reason why less live lobster was shipped to Canada.

“The global lobster supply contracted for the first time in many years in 2017 and part of that was due to the lower landings in the U.S. Despite the drop in landings, U.S. exports increased in 2017. That’s because the Chinese market was much stronger than the U.S. market.”

In part, the higher prices that fishermen were getting in the fall of 2017 and coming into 2018 was because there was less lobster available overall, said Sackton. “Where there was more lobster available, was in China. The supply to China increased substantially in 2017,” he said.

Sackton added that the growth in China “is not slowing,” but cautioning too high a price will “grind that market to a halt. It’s very important to maintain the supply into China.”

The high prices in 2017 slowed the market this past spring because many sellers and packers were losing money, said Sackton, but has averaged out over the summer months. A glut on whole cooked lobsters has also improved, and the market on frozen lobster tails is strong, he noted.

“Processors are going to be very cautious,” he advised. “They can’t afford to repeat the mistake they made with whole cooks. Because whole cooks were the weakest part of the market last spring, that’s why processors were paying lower prices in the Gulf. This year they are getting a much better return on lobster tails. The tail market is the only place processors can make money. Nobody’s making money on lobster meat right now. I think they will be buying more but they’re not going to speculate and go crazy like they did in 2016 with whole cooks.”

The lobster fishery in LFAs 33 and 34 opens on Nov. 26. According to DFO statistics, LFA 33 landings peaked in 2015-16 at 10,024 tonnes, a record for the LFA and then declined to 8,019 tonnes in 2016-17. While there are still outstanding logs for 2017-18, landings are expected to be higher than the 2016-17 level. The landed value also peaked at $147.6 million in 2015-16, declined to $129.0 million in 2016-17, and is expected to be more than $130 million for the 2017-18 season.

In LFA 34, landings reached a record 29,133 tonnes in 2015-16, then declined to 22,684 tonnes in 2016-17 (sixth highest all-time). Landings for 2017-18 are expected to be higher than 2016-17 and be at least the fifth highest on record. Landed value for LFA 34 peaked at $414.9 million in 2015-16, a record for the LFA. It decreased to $354 million in 2016-17, second all-time at that point. Landed value for 2017-18 is expected to be higher than the 2016-17 figure.

In LFA 35, where the season opened on Oct. 15, landings reached a record 3,941 tonnes in 2013-14, then declined for the next three seasons to 3,072 tonnes in 2016-17. Landings for 2017-18 are expected to be higher than the previous season. Landed value for LFA 35 peaked in 2015-16 at $48.2 million, then declined to $46.2 million in 2016-17. Landed value for 2017-18 is expected to be higher than the 2016-17 level and may rival the 2015-16 record.