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GLOBEFISH - Analysis and information on world fish trade

Fishmeal and fish oil - June 2014

10/06/2015

Strong demand and limited production for fishmeal and fish oil result in record high prices in 2013

Growing demand from the aquaculture and terrestrial animal feed sectors maintained pressure on fishmeal and fish oil prices, while increasing demand for direct human consumption further increased fish oil prices. Declines in global production due to quota restrictions and adverse weather pushed both prices up further in 2013 to record high levels. China remained the largest consumer of fishmeal although the country is shifting its supplies to originate from Southeast Asia while growing its domestic production as well.

 Feed producers are increasingly substituting with plant based material to reduce their dependency on fishmeal and oil. In May 2013, the price ratio between fishmeal and soymeal reached 3:6:1 (compared with the 10-year average of 3:3:1), but in September it retreated to 1:6:1 due to drastic changes in soymeal prices.

Production

Fishmeal production from the top five supplying countries in 2013 was 18% lower than in 2012. Peru and Chile faced the biggest declines, dropping 26% from 1 160 000 tonnes to 855 000 tonnes. This amount reflected the lowest volume in six years, and was in fact only 40% of the highest amount, produced in 2011. This low fishmeal production in 2013 is largely due to Peru’s low summer anchovy quota in 2012, which amounted to only 810 000 tonnes. Both low production and low inventory drove up the prices of fishmeal to a record high for the first half of 2013. Fishmeal production from Denmark, Norway and Iceland was slightly higher than in the previous year, but their limited production only offset the decline in Peru and Chile slightly.

Fish oil production faced the same situation as fishmeal. Production from Peru and Chile dropped by 39% in 2013, reaching just 181 000 tonnes. In turn, their production share also significantly declined from 77% in 2009 to 41% in 2013. Slightly higher production from Denmark, Norway and Iceland closed the overall supply gap to a limited extent. The USA notably exported 72% more volumes of fish oil for the year, mainly from gulf menhaden. These trends, along with a growing demand for fish oil and quota restrictions, continued to put upward pressure on fish oil prices throughout the year.

Export

Peruvian fishmeal exports in 2013 were reported at 846 700 tonnes, which was only 64% of the volume in 2012. With the exception of China, exports to all major countries fell to less than half of the 2012 level reaching record low volumes. After the winter fishing season, exports increased tremendously, with 60% of these volumes destined to Chinese ports. Chilean fishmeal exports also reported the lowest record in 6 years, exporting less in 2013 to almost all importing countries. China had the largest market share, accounting for 44% of Chilean fishmeal exports.

In the case of fish oil, Peru only exported 98 800 tonnes of fish oil in 2013, a mere 36% of the volume in 2012 and the lowest production in the past six years, due largely to weather and quota restrictions. Chile exported slightly more fish oil than in the previous, reaching 68 100 tonnes. US exports grew, shipping 72% more fish oil than compared with 2012. The bulk came from gulf menhaden, which demonstrated a 158% increase over 2012.

Markets 

Germany

Germany reported total fishmeal imports of 167 200 tonnes in 2013, a drop of 27% compared with 2012.  Fishmeal originating from Peru contributed to less than half of this volume, while the import total from Iceland, Denmark, France and Mauritania more than tripled to more or less close the gap. Nevertheless, Peru and Morocco still supplied the majority of German fishmeal imports for the year, accounting for 58%.

USA

US fishmeal imports increased steadily in 2013, though the 2012–2013 growth rate slowed to 10% compared with 2011–2012 growth rates of 26%. Mexico and Chile were the major suppliers contributing 76% to the US market. After its low year in 2010, Mexico has been slowly expanding its market share. US demand was primarily from the terrestrial animal farming industry.

UK

The UK imported slightly less fishmeal in 2013 at 658 000 tonnes. Imports from Peru fell by half, but imports from Norway, France and Spain compensated for the decline to some extent. In general, the current fishmeal imports in the UK have been on a downward trend since 2009 and decreased by 11% in 2013 compared with 2012.

Prices

Due to the strong demand from aquaculture and the terrestrial farming sector, fishmeal and fish oil prices in 2013 were in general quite high. The price of fishmeal went up to USD 1 919 per tonne in January 2013, largely due to the low quota in late 2012. Throughout 2013, with weaker demand from the shrimp industry, increased anchovy landings in Peru post winter season, and decreasing demand from China towards the end of the year, fishmeal prices gradually came down to USD 1 553 per tonne in December 2013. Soymeal prices had a drastic range of ups and downs during the year from USD 553 per tonne in January to USD 1 024 in October, though generally, the price is increasing as its substitution role for fishmeal strengthens.

Fish oil prices reached record high levels in 2013. Although the USA exported 72% more fish oil than in 2012, the decline in exports from Peru due to quota restrictions and adverse weather drove prices up. Growing demand from the direct human consumption industry pushed up fish oil prices further. An additional factor impacting supply was that after the low quota in Peru in 2012, much of the fish caught in 2013 was adult fish, containing less fat for oil production.

Outlook

The demand for fishmeal and fish oil from aquaculture and the terrestrial farming industry will remain strong in the long-term. Increased demand from the direct human consumption industry will also continue to push up the fish oil price. Although an increasing amount of meal producers are revising their formula to substitute with more soymeal or canola to reduce their dependence on fishmeal, this process could be lengthy, particularly when the price of soymeal showed instability in 2013.

Although anchovy quotas were raised to 2.05 and 2.3 million tonnes for two fishing seasons in Peru (May–July 2013 and November 2013–January 2014), several companies reported heavy financial losses in 2013 and there is yet no news about the quota for 2014. Nevertheless, it is anticipated that the strong El Niño effect in 2014 will impact fishmeal production.

On the other hand, there is some promising news. The result of a recent stock assessment showed that the status of the gulf menhaden fishery stock is healthy at current harvest levels. Furthermore, with the EU’s introduction of a ban on discards for quota stocks in 2014, more by-products from the processing sector for fishmeal production may be expected, especially within the context of climbing fishmeal prices. Although both of these developments will help to reduce the pressure on the supply side to some extent, prices for fishmeal and oil are expected to remain high in the long-term.

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