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Bolstered by short supply and continued strong demand, lobster meat prices have reached record highs. But with both summer tourism and the peak of harvest season coming soon, opinions divided on what will happen to prices over the next few months.

Several sources told Undercurrent News that prices have risen to just under $30 per pound for lobster meat, generally comprised of claw and knuckle (CK) meat.

According to Bill Demmond of Inland Seafood, this time last year lobster meat was selling for about $23.50/lb.

One industry source who wished to remain unnamed, (source A), said that at this time last year prices hovered around $20/lb. The year before that meat prices were closer to $17/lb, the source said.

"The price of the meat is at an all time high, at a level we never imagined," source A said. "We don't know how high it can go. What has surprised us quite a bit is the continuous demand for lobster even at these record high prices."

With tourism season coming up source A said he expects demand will continued to stay strong as it usually does throughout the summer.

"Next time we anticipate some sort of adjustment is after Labor Day when the tourists go home," he said, but added that he thinks it's likely demand will remain strong even after the season ends.

"Once upon a time if you didn't sell meat in the summer you had to hold it because the markets were gone," he said. "But that has changed because of the demand that has become national and even global in some ways."

However, an increased harvest could provoke a price drop later in the summer, several sources said, according to the Associated Press.

New England's catches, which could come earlier due to warmer temperatures, could spur an earlier start to the principal harvest season, which would put a significant amount of lobsters on the market eroding price gains.

An early season in 2012, for example, caused prices fell to their lowest point in almost 20 years.

Harsh weather means lower supply

Prices have been pushed up by a low supply of lobster, due to harsher-than-expected spring weather.

Lobster market analyst Michael Gardner said he generally expects demand to go up in the summer, but said that the drop in supply in recent months has been significant enough to push prices up itself.

In several major fishing areas in Canada, Gardner said he saw catches fall by as much as 25% since the beginning of May.

"It's not a surprise that prices have crept up. It wouldn't take an increase in demand to cause prices to go up if you had that kind of decline from the major areas," he said.

Source A also estimated that there has been between a 20% and 30% decline in landings in May and June so far.

The harsh weather, which came after a very mild winter, came as a surprise to the industry.

"Everybody was expecting the lobsters would start hitting the traps early this year," said Demmond. "But the first week of May set a record for low temperatures, and the water temperature actually dropped instead of going up like it was expected to."

Source A also said the weather took fishermen by surprise after the mild winter allowed them to start earlier this year.

"We were expecting a huge spring fishing season because of that, [but] when the season started, we experienced some of the worst fishing weather we can remember," he said.

Meat prices expected to continue leading the market

Other sources told Undercurrent that over the past several years the market driver for lobster has shifted from tail prices to meat prices, a trend that's expected to continue for at least the next few years.

The price for live product and C&K lobster meat has increased significantly, while prices for tails have been relatively stable and have just recently started to increase.

In response, companies are expected to start adding more tail meat into the lobster meat mix.

“I think what you’re going to see is [processors] will try to produce less tails this year, and the only way to do that is either to make more whole cooked lobsters, sell more of them live, or cook some of the tails and mix it in with your meat,” Demmond said.

Adding tail into the lobster meat mix is not a new technique, but it's one that hasn't been needed for several years.

"From the late 90's all the way through 2004, tails drove the market," Demmond said. "In the last two and a half years the market has flipped, now meat is driving the market instead of the tails. it's very interesting."

Part of the reason for this has been the increasing amount of product going into Asia, despite a slowing demand for lobster in China.

"The Asian market is not for tails, they're buying whole lobsters," Demmond said. "They're buying whole cooked lobsters and frozen, raw whole lobsters."

In the last two weeks, however, tail prices have started to move back up. According to Demmond prices for tails have increased by between 50 and 70 cents a pound.

"I think that's a price correction and that it's going to continue to trend upward," he said, adding that it's likely a sign of old inventory running low.

Processor prices to wholesalers for small tails stand at about $15/lb to $15.50/lb, for medium-sized tails the price is in the high $15/lb to $16/lb range and for large tails prices hover in the mid-$16/lb.

"A month and a half ago small tails would be had for $14, medium for $15, so prices are up over a dollar from last month," Demmond said.

China market still significant, despite slowing demand 

China's booming demand for lobster has started to slow down in recent months according to some, with some in the industry expecting it to stay at current levels

"[Demand in China] has reached a plateau," said source A. "Now I think prices are going to stabilize and we foresee that will be the trend for the rest of the year."

According to Demmond, Chinese demand has slowed significantly, "but there’s still big volume going over there".

"I think part of the issue is that there was so much demand in China that...there became a glut. It oversaturated the market," he said.

However not everyone is convinced that the Chinese market has cooled down.

"It's hard to know if it's really calmed down," said Gardner, saying that over the past five years there has been a huge increase in overall exports of lobster to China.

According to recent data from the National Oceanic and Atmospheric Administration, exports of lobster from the US to China through April of this year was 550,859 kilos, up over 20% from the same time period in 2015, when exports from the US were at 451,969 kilos.