SEAFOODNEWS.COM by John Sackton — Oct 15, 2014 — Lobster prices in the US market for both tails and live lobster are the highest level for this time of year in three years.
For the period July through Sept. 4 oz American tails were priced 18% higher than the previous year.
Live prices in September were 7% higher than last year, and fully 18% higher than two years ago.
The reason for these higher prices appears to be the landings shortfall in Maine, compared to prior years.
After two years of record and near record landings, anecdotally it appears that landings this year in Maine will be lower. This is largely thought to be due to colder water temperatures in the Gulf of Maine.
The effect of the colder water was to delay and spread out lobster molting, and to delay the period of time when lobsters are actively feeding and enter traps.
But retailers, having two good years of lobster sales under their belts, plowed ahead with their promotional plans this summer, and got surprised by the price increases.
Retail promotions on lobster (both tails and live) for the July- September period is up 53% in 2014 compared to 2013.
This surge in retail promotional demand has meant that packers have been scrambling to find lobsters to meet retail needs.
At the same time, dealers report continuing demand from China, especially on live product. The result is an increase in costs of raw material for packers, a higher live price, and a retail market that is already committed to take product.
When buyers overshoot the mark like this and are faced with supporting a price they did not anticipate, they often cut back the following year. Mostly the price increases got passed along, with the median retail price increasing 17% during the summer, fully in line with the increase in wholesale pricing.
But the higher prices mean the lobster promotions are less appealing to customers and don't serve the fuction to drive traffic as well as they did in prior years.
Maine landings should remain plentiful this month, and the next big surge of product will come with the opening of the Southwest Nova Scoatia season at the end of November.
The future direction of the lobster market will depend heavily on the volumes produced in Nova Scotia.
Exports to Europe may be constrained by the weaker Euro compared to the dollar, and the lackluster economy in Europe.
Canadian exports to the US should be very strong, as once again the weaker Canadian dollar will provide a tailwind for lobster harvesters and packers selling to the US market.
Finally, Chinese demand is here to stay for live lobsters, but it does fluctuate. On the West Coast there has been a significant fall off in demand from China for live dungeness crab. The result is more product is packed as whole cooks and frozen sections.
It remains to be seen whether trend develops for lobster on the East Coast.
This story originally appeared on Seafood.com, a subscription site. It is reprinted with permission.