Rumors At SIAL About Falling Tuna Prices Might Prove Wrongff

By Atuna

The SIAL 2008, Europe’s second largest Food show, which is being held in Paris between the 19^th and 23^rd of October, is the opportunity for many European canned food importers to meet their suppliers, also their canned tuna processors.

This year, the amount of tuna canners exposing at the show is lower than at any previous SIAL in the last decade. The SIAL is a bi-annual event.

During the food show, there were several persisting rumors about declining tuna prices – however hardly any of these stories seem to be backed up by facts. The main source of these rumors can be traced back to a specific group of EU brokers, or importers. It concerns buyers or brokers who have seen their position weakened by the decrease in supply from Asia – especially Thailand – to the EU market – and the increase of supply from ACP markets.  In many ACP countries, canneries are owned by large tuna groups who sell directly to retailers throughout Europe – often without the use of importers or brokers.

Asian exporters from Thailand, Philippines and PNG have traditionally mostly relied on importers and brokers for their sales and distribution– especially in Germany - who made a tradition of switching suppliers constantly and frequently based on price. Due to the tightness of the raw material market – the high prices – and Thailand’s inability and lack of willingness to compete with ACP nations, the negotiation position and the function of these players have weakened.

Now that skipjack prices have started to relax somewhat in Asia, these brokers and importers are pushing hard to further widen the price gaps between South America and Asia. With raw skipjack tuna prices in Manta, Ecuador, at the level of Usd 1850 CFR per M/T, the prices in Bangkok would have to be decreased to about Usd 1300 - 1350 per M/T in order for Thailand and Philippines to be able to compete again in Europe with a 24% duty on their canned tuna products.

As a consequence, tuna suppliers today at the SIAL are bombarded by European importers, brokers and even retailers with rumors about falling raw materials and even wild stories about packers already offering canned product based at Usd 1300 per M/T CFR Bangkok for skipjack.

Today’s reality however is still far from that. Latest confirmed news is that skipjack is traded in Bangkok between Usd 1650 CFR and Usd 1600. Indeed there are known bids at levels of around Usd 1550 – however is seems these have not been entertained yet. Also in Philippines, prices remain over Usd 1600 CFR at this moment. 

Even with Ecuador’s tuna fleet back at sea after the ending of the IATTC fishing ban, landings of skipjack in Manta remain minimal. Prices are firm around Usd 1850 CFR for skipjack and the main supply is now coming from the Central Western Pacific Ocean from Korean, Taiwanese or American vessels. As a consequence of catches being so poor at this moment in the Eastern Pacific –and the demand from Ecuador’s loining plants and canneries remaining strong– it could be possible that the increased demand for fish from the WCP can drive prices CFR Bangkok back up, or at least make them stabilize around Usd 1600 -1575 level.

Tuna canners, who are willing to let themselves be guided by the current market rumors at the SIAL, could face high risks and substantial losses when this non substantiated  information about falling prices proves wrong. Overall there seems to be a consensus in the market that the sharp decline of raw material prices, that some are furiously hoping for, is not about to happen within this year.