Part of the downward pressure on prices is due to the increasing supplies from low cost China and the weak US dollar. The forecast will come as some relief for processors.
In Germany, they have paid an average of three per cent more for cod fillet blocks over the past year to May. Processors in Germany were paying a delivered price of €5.35/kg in May 2006, according to the European Price Report (EPR) for the month.
Based on EPR indications, frozen cod prices have not increased as strongly in European markets as other frozen fillet prices, such as Alaska pollock, saithe and hake, over the period, stated Gerry O'Sullivan in a report for Globefish, a unit of the Food and Agriculture Organisation.
"With the current weakness in the US dollar likely to persist, the recent upward trend in frozen groundfish fillet prices in European markets appears unlikely to continue into the second half of 2006," wrote O'Sullivan. "In this context, frozen cod fillet prices may be expected to remain stable, or come under downward pressure, in the months ahead."
The current stability in frozen cod prices is also reflected in average unit values for Norwegian fillet exports which have been stable during the March to April period at just over NOK44/kg (€5.60) and up two per cent on April 2005, he notes. Export volumes from Norway this year are also stable at about 7,000 tonnes, a level in line with exports during the first quarter of last year.
In France, the decline in volume imports during 2005 has continued into 2006. French imports fell two per cent last year to 15,700 tonnes, compared to 2004. For the first two months of this year, imports are down four per cent compared to the same period last year.
The decline in France's imports this year was mostly due to a fall in volumes from Iceland and Norway. Imports from Iceland fell by 37 per cent, and from Norway by 14 per cent compared to the January to February 2005 period. The country's imports from China are down slightly this year following a 23 per cent increase during 2005. China's share of French imports is up to just over 22 per cent of the total.
For the early months of 2006, China was the leading supplier of frozen cod fillets to the French market. Norway, the top supplier in recent years, has dropped to second position in volume terms although it remains the leading supplier in value terms.
China is also forging ahead in the UK market, the largest European importer of cod fillets. The UK imported 79,080 tonnes last year, a slight drop from 2004.
China overtook Iceland to become the second volume supplier just behind Denmark, which remains the number one exporter to the UK despite an 11 per cent fall in supplies during 2005. Meanwhile China increased its supplies to the UK market by 10 per cent to 16,470 tonnes.
China's increasing penetration of the UK market is based on its low cost production advantage over traditional European suppliers, stated O'Sullivan.
UK import unit values confirm China as the lowest cost supplier among leading exporters, he said. Average unit values for frozen cod fillets from China was £2.48, compared to £3.80 from Iceland, £3.35 from Norway, and £3.11 from Denmark.
China is getting competition from the Russian Federation, registered the biggest percentage increase last year. Supplies of fillets to the UK from this source jumped 35 per cent on 2004 to 9,000 tonnes last year.
The UK's frozen cod imports have been stable in recent years at around 79,000 tonnes, Globefish reported.