GLOBEFISH - Information and Analysis on World Fish Trade

Fishmeal - July 2009

01/07/2009

Total fishmeal production in the first quarter of 2009 was 433 000 tonnes, some 25% less than last year. Peruvian production in the first quarter of the year was extremely low. However, the indications are quite favourable for the second quarter of the year, as Peruvian production improved with the introduction of the new fishing quota system. Overall, fishmeal production in 2009 is likely to be in line with 2008 production or only slightly lower. The coming year, however, might be an El Niño year, which might lower production in Peru and Chile. Prices started to move upwards in the second quarter of the year, also in line with higher soymeal prices.

When looking at the overall supply situation, it has to be considered also that increasing quantities of fishmeal production are coming from fish processing waste. The share of these products in overall world fishmeal production is estimated at 25%. Probably some 1.2 million tonnes of fishmeal are coming from this source, generally escaping official statistics.

Soymeal was able to reach a new high price level for the year and prices will stay that high until the new crop arrives on the market later in 2009. At present the market expects that the current shortage will be relieved once the new USA crop becomes available. In June 2009, soymeal prices reached USD 450/tonne, which compares to USD 320/tonne at the beginning of the year. Fishmeal prices went up too, to reach USD 1 143/tonne in mid year. Overall shortage of fishmeal in the market was the main reason for price hikes. However, price levels are still USD 70/tonne below those of last year.

Lower exports from Peru

During the first quarter of 2009, fishmeal exports from Peru were substantially below last year’s figures. However, buying interest last year was exceptionally high, owing  to  strong  Chinese  buying  interest.  This  year,  trade  is  back  to  normal.  Total  Peruvian  exports  were  427 000 tonnes during the January to March 2009 period, 40% less than during the same period of 2008. China continues to be the main buyer of Peruvian fishmeal, accounting for more than 50% of Peruvian exports.

Chinese fishmeal stock was 100 000 tonnes in early July 2009, a normal level for this time of the year. The market situation is quite stable, with prices around USD 1 135/tonne. More buying interest is foreseen during the third quarter of the year.

Starting in May 2009, experts were forecasting a El Niño in the tropical Pacific beginning later this year. According to US and Australian weather forecasts, the possibility for the El Niño has climbed to 50%. Already surface ocean waters along Peru have started to warm up. If the temperature continues rising, local fishing will be affected and fishmeal production will be restricted in turn. As a result, traders might build up inventories and prices are likely to climb up.

Prices going up in near future

The Peruvian quota is exhausted. There are several feedbacks on the new individual quota system. It will take some  time before the quota system is adjusted sufficiently to perform as well as the designers wanted. World supply of fishmeal is quite low at the moment, and will decline somewhat in coming months, but the overall demand is  very good. Peru, in particular, has very limited supplies of fishmeal, which have to last for the next 4 months or so as no major fishing will take place. As a result prices are expected to increase substantially in coming months.

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