GLOBEFISH - Information and Analysis on World Fish Trade

Tighter supplies and rising prices

08/07/2020

With the COVID-19 pandemic wreaking havoc on the global economy, the quarantine and curfew in Peru was extended until the end of April. However, the lack of workers and upstream inputs may potentially halt the production of fishmeal and fish oil completely in Peru. As of this writing, the start of the first fishing season of 2020 in Peru has not yet been announced due to COVID-19.

Production

Global production of fishmeal and fish oil in 2019 was lacklustre. The first anchovy fishing season of 2019 in the centre-north region in Peru ended with total landings marginally over 2 million tonnes, nearly 96 percent of the designated 2.1 million tonnes quota. In November 2019, the Peruvian government set the TAC for the second anchovy season at 2.79 million tonnes, up by 38% compared with same season in 2018. However, the high presence of juveniles led to an early closure in January 2020 of the 2019 season, which usually lasts until March/April. Only 35 percent of the total quota was fulfilled.

Global production of fishmeal in 2019 decreased by 27 percent compared to 2018, while global fish oil production was 24 percent less in the major producing countries. Peruvian fishmeal production in 2019 reached 796 384 tonnes, down by 43.3 percent compared to 2018. This decrease was mainly attributed to the lower quota of anchovies observed for the first season and early closure of the second season.

In Europe, landings of small pelagics were slightly weaker in 2019, thus the combined fishmeal output in Denmark and Norway dropped by approximately 7 percent.

Trade

In 2019, Peru’s exports of fishmeal and fish oil products totalled 1.06 million tonnes, which has levelled off since 2018. Over 70 percent of the Peruvian exports were destined for China. The remaining Peruvian exports were mainly absorbed by Viet Nam, Ecuador, and Japan. In the Nordic region, Denmark and Iceland have been playing key roles in meeting the regional demand.

Price

Since late 2019, prices have been on an upward spiral due to the anticipated early closure of the Peruvian fishing season. Furthermore, the upward price trend has continued as the Chinese livestock farming sector begins to recover from the COVID-19 outbreak.

Outlook

To a large extent, 2020 will see many industries under huge pressure, fishmeal and fish oil would not be an exception. So far, the quota of the Total Allowable Catch (TAC) of 2020 in Peru’s first fishing season has not been announced, which is an unknown factor affecting the market. Peru’s bleak fishing season will likely translate into a supply shortage for fishmeal supply globally. In addition, to what extent the pandemic will hold back the fishing and reduction industry is still yet to be seen.

From the demand side, with restaurant closures and trade being completely cut off in many countries, there is lower demand for farmed fish, and thus the need for feed. On the bright side, COVID-19 now seems to be under better control in China. Given the huge Chinese demand for fishmeal when the pig farming and aquaculture sectors return to normal, fishmeal trade will recover soon. In the short term, prices of fishmeal and fish oil are expected to increase due to scarce raw material supply coupled with global transport disruptions caused by COVID-19.

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