20 Dec Outlook for 2020 US Scallop Season
Last week, the New England Fishery Management Council announced key information regarding the upcoming US scallop season. While it still needs to be approved by the National Marine Fisheries Service, it is often approved as submitted. The information below summarizes the release and reflects our first impression of the data.
The Short Story:
The Council is calling for a reduction in catch from an estimated 62.5 million pounds in 2019 to 52 million pounds in 2020. On a percentage basis, this reflects a 17% reduction. The reduction is driven by fewer closed area trips (five, down from seven), with the number of open days at sea remaining unchanged at 24. Watch out for smaller sizes; the Council is allowing for an increase in crew size in one of the closed areas to support shucking small-count scallops. The scallop season runs 365 days a year, and “resets” to these new levels on April 1st, 2020.
- The Council expects landings of “roughly 52 million pounds” of scallops in the upcoming 2020 season, down from an estimated 62.5 million pounds harvested in 2019.
- Maintaining 24 open-area days at sea fishing days, the same as the current season (implied catch per day increasing by 100lbs to 3,300)
- Decreasing to five closed-area fishing trips of 18,000lbs, down from seven. The closed area fishing trips include:
- Mid-Atlantic – two trips (down from three)
- Nantucket Lightship – 1.5 trips (down from three)
- Closed Area 1 – half trip
- Closed Area 2 East – one trip
Why the reduction? While the Council was careful to note that the resource is not overfished nor subject to overfishing, it noted that recruitment has “not been robust”, and “signs of large, incoming year classes were not evident on a wider scale”. Overall, the Council says it is “opting to leave some harvestable scallops on the bottom to support the 2021 fishery”.
Watch out for smaller sizes. The Council included a special provision to allow increased crew count (ten people instead of eight) on trips into the Nantucket Lightship South-Deep area because the scallops are marketable but smaller in size, which will take more time to shuck. We assume this references scallops smaller than 40ct, which at this volume will be a significant new dynamic in 2019. The catch permitted in this area is 18,000lbs per vessel, or approximately 5.5 million pounds of the total catch – more than 10% of what the Council expects to be landed in the whole year.
What will this mean for pricing? We see the 17% reduction in supply putting upward pressure on scallop prices, and we believe this could be further exacerbated by the fact that 10% of the remaining catch will be at substantially smaller counts than typical. Taken together, if we assume this reduces the supply of scallops ranging from 8ct-30ct by 27% (17% from catch reduction, 10% “lost” to smaller size brackets), it stands to reason that pricing in 2020 for U10, 10-20, and 20-30ct domestic scallops could increase noticeably over 2019 levels.
Don’t forget the other parts of the story. Remember that upwards of 50% of scallop supply into the US comes from imports. As a result, a substantial increase/decrease in imports to the US could offset/exacerbate price pressure caused by the supply reduction of the US catch. Also, pricing is driven by supply AND demand. To the extent there are increases/decreases in demand for scallops in the US, there could also be more/less upward pressure on prices.
The information we put together in this note reflects our initial read of the Council’s release and relies on their estimates, not our own. As we have time to digest this release and to also look at the information regarding imports of scallops to the US and exports of scallops from the US, we will put together and share our scallop market factbook (the one we did last year can be found here).