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Latin Canners Challenge Bangkok’s Global Dominance Latin America, March 26, 13

In 2012, Latin American canneries in major processing countries, Ecuador and Mexico, have been pulling major quantities of the Western Central Pacific (WCP) tuna catch their way. In order to facilitate the every increasing appetite of the Latin American for canned tuna, the continued demand from exports markets, and faced with an insufficient supply from Eastern Pacific Ocean (EPO) tuna catches, canneries turned to import large volumes of WCP whole round frozen tuna. This makes them a major challenger for world’s biggest tuna processing country: Thailand.
Although no official statistics exist, it is estimated that about 200,000 M/T of whole round frozen tuna was transported by frozen carrier vessels from the WCP catching grounds to tuna ports in Ecuador, Mexico and Colombia over last year.
The 200,000 M/T amounts to about 8,5% of the total WCP catch, making Latin American canneries increasingly competitors of the American Samoan, Korean, Japanese, Philippine and especially Thai canneries, which rely heavily on the WCP catches. Traders have been very successful diverting tuna caught by Taiwanese and American flagged vessels to Latin America, where buyers were willing to pay higher prices; forcing Bangkok to bid higher as well, and having a harder time to secure its raw material needs. These dynamics have had a bullish effect on global skipjack prices, which reached record levels in 2012, at USD 2,350 CFR Bangkok for skipjack 1.8 kg –up.
Considering that EPO catches reached about 540,000 M/T in 2012, and adding the 200,000 M/T of WCP imports, Latin American canneries processed a total of 740,000 M/T of whole round tuna. Thus making the buying power and raw material need of the Latin American canneries combined almost equal to that of the entire Thai tuna processing industry.
Major difference between Thai canners and Latin American processors is that the Thai lack a strong domestic Asian market, and rely heavily on the distant markets such as the USA, Europe, Japan and Middle East. Latin American plants often firstly serve their domestic markets, which pay better prices, and then secondly look at lower paying export markets in Europe and, to a lesser extent, the USA. The total Latin American consumer market is estimated at about 50 million cases of 48x170 grams of canned tuna, and growing.
For 2013, the pulling effect by the Latino’s is expected to get even stronger, especially when we would see a fall in EPO catches. The last 2 years this has been equal to about 540,000 M/T, but in 2010 there was a drop to 461,000 M/T. In such a scenario, the EPO cannery sector would most likely have to import an additional 100,000 M/T on top of the current 200,000 M/T of imports to sustain its current output, pulling 13% of catches away from the Asian tuna industry.