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Ever-growing demands and extreme supply constraints pushed fishmeal and fish oil prices to a record high in late 2014

Wednesday, March 18, 2015

Peruvian anchovy fishing and thus fishmeal and fish oil production have been affected by a moderate El Niño phenomenon for all of 2014. However, until June 2014 prices for fishmeal in international markets did not respond significantly to the anticipated supply shortage likely to be the result of the low anchovy catches in Peru. Nevertheless, ever-growing demands and extreme supply constraints pushed fishmeal and oil prices up again from August, when the actual reduction in catches was apparent. In October 2014, an FOB price of USD 2 400 per tonne was recorded for super prime fishmeal in Peru. In early December IMARPE and the Ministry of Production confirmed that there would be no quota for the second fishing season at the end of 2014.

Outlook

In October, IMARPE recommened that no quota be allowed for the second season until another reassessment survey was completed. This recommendation was made because only 1.45 million tonnes of anchovy biomass were found after the first survey, while in 2013 the figure was 10.8–12.1 million. Since then prices have remained generally stable. Usually at the end of the year, Chinese demand for its swine industry, the largest in the world, increases for the upcoming Spring Festival. This year was no exception and by December 2014, China had already consumed most of its large fishmeal stock with only an estimated 30 000 tonnes left.

In the long term, demands for fishmeal and oil can only increase with the growth of aquaculture and the terrestrial farming industry. It is noteworthy that Viet Nam, a significant aquaculture producer, has become the fourth largest destination for Peruvian fishmeal export. Oil production destined for direct human consumption will also seriously compete with the aquaculture and animal farming sectors.

Globally, efforts to reduce the pressure on supply are ongoing, with countries working to diversify their sourcing. According to Undercurrent News, China has had to diversify its sources of product to purchasing from Southeast Asia, Morocco and Panama.

It is anticipated that consuming countries will strengthen their search for alternatives in order to reduce their dependency on fishmeal, especially given the current extremely high prices. The fishmeal and soymeal price ratio in December 2014 was 4.08:1 compared with 2.83:1 in December last year. In the short term, it seems that the vulnerability of fishmeal and oil production will not change if production continues to mainly rely on pelagic species. Utilizing more by-products from processing factories could help the situation.

In early December 2014, IMARPE confirmed its recommendation after a second survey that there should be no quota issued for the second fishing season. The justification for this recommendation is that environmental conditions are expected to have a negative impact and will reduce anchovy stocks, also that a large portion of the anchovy in the northern-central region consists of juveniles. However, prospects for this spring are more hopeful, as the survey for the first TAC of 2015 will be carried out in April, with the possibility of finding considerable volumes of stock of appropriate size and weight. However, it could still be a difficult financial year for Peruvian fishmeal producers in 2015, as they will have to sell production made from the low catch of the previous year, similar to the situation in 2013.

[Source: FAO Globefish. Read Fishmeal and Fish Oil report - March 2015]

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