Spend Matters welcomes another guest post from Blair Scott of Mintec.
The price of US scallops are already at a record high level and look set to increase further in the coming months. Since the beginning of the year, prices have soared by a sharp 20%. This hike in price can be attributed to the fact that export demand has been at high levels over the past few months. In addition, the US scallop quota for 2013 is being slashed by 35%, meaning rising demand is being met with falling supply.
The 35% cut equates to a drop of harvested scallops of 9,100 tons. The reason behind this cut in quota is the falling numbers of scallops. Also supporting prices for larger sized scallops is high demand, which results from buyers’ reluctance to switch to the smaller imported scallops from origins such as China, Peru, and Japan. Smaller scallops, considered to be of a lesser quality than the larger variety, are currently widely available.
Current market sentiment suggests that there will be further cuts to the days at sea allowance for the fishing season beginning March 2014 and ending February 2015, which has caused many buyers to source their requirements earlier in the season, pushing prices up.
If US prices continue to rise, then other suppliers such as China, Japan, Peru, and some European countries are likely to try and increase exports by reducing their prices in a bid to encourage buyers to switch. Currently buyers are mostly concerned over the supply of large scallops, but if prices continue to rise, then it is expected that buyers will be more open to switch to the smaller scallops from other countries. It is yet to be seen what will happen to prices if supplies of the larger scallops run down completely.
With falling supply, rising demand, and the possibility of increased competition from European producers, it seems the US scallop market has many challenges ahead.