Supply Dynamics:
Canada – Zone Managed Fishery
-The spring season in the LFAs (Lobster Fishing Areas) across Atlantic Canada started slowly in most areas due to high winds and colder-than-expected water temperatures hampering landings. The end of the Southwest Nova Scotia season in May was especially poor, leading to increased competition from the live trade seeking to source products elsewhere. Overall, the production of processed lobster in May was likely down 15-20% YOY from 2022.
-The new 2023 production season began against the backdrop of a lackluster production year in 2022. Excluding the Covid-shortened season of 2020, 2022 in-shell tail import volume from Canada into the US was the lowest since 2011, and 2022 Canada meat import volume into the US was the lowest since 2010.
-The lobster production season typically starts in May and runs into December, supported throughout by landings in both Canada and Maine.
Maine
-Maine landings through May were limited, which is typical for the time of year. Maine landings and fishing effort typically drop off substantially by December. While there is fishing over the winter, it results in very limited volume until June. Maine volume tends to increase significantly in the month of July, with heavy landings in the July-October time period.
-Maine lobster landings in 2022 were 97.9 million lbs, tied with 2020 for the lowest volume landed since 2010 (2010 landings were 96.2 million lbs). Some of the decline in 2022 Maine landings is due to a lack of fishing effort at low shore prices. Maine lobster landings peaked in 2016.
Demand Dynamics
Live Lobster
-Typical of the Canadian spring season, large quantities of hard-shell live lobster have been purchased and stored in tubes to be sold later in the summer. Demand for product by “tubers” has been quite strong and has resulted in a significant percentage of live purchases so far in the season. Demand in the US and Europe for live lobster has been mediocre. Demand coming out of China has been spotty and hard to forecast.
Processed Lobster
The 2023 production season started in May with limited carried inventories of both meat and tails. Market interest and the velocity of most meat packs, but especially CK, have been quite strong out of the new season. Meat prices started the spring at almost 30% lower price levels than the industry saw last spring, and reduced pricing has led to increased menu placement at food service. On lobster tails, the lackluster production volume and limited inventory at the end of the 2022 season resulted in a large price jump over the winter. Demand for tails will ramp up with new season production, and buyers are beginning to engage at scale.
Pricing Outlook:
Live lobster prices
-Live prices came down from extremely high levels the prior month, as May spring fishing LFAs opened, which is typical of the season. Fairly high shore prices due to limited landings and poor fishing conditions will limit how low hard-shell prices can go.
Processed Lobster prices
Tail prices accelerated rapidly over the winter due to the shortage of inventory, lack of replacement, and increased demand. With new season production coming onto the market in May, tail prices have declined somewhat as volumes began to fill in inventory gaps. The decline will be limited to an extent by lower production volumes from the spring season and relatively high shore prices. The meat market has been stable throughout the winter and started spring at similar price levels. Given increased velocity and menu placement, the meat market outlook, particularly for nicer packs, is fairly strong.
6/12/2023
