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GLOBEFISH - Analysis and information on world fish trade

Production increases for key species expected to ease demand pressure on prices in 2017

05/07/2017

The report analyses the market situation over the year 2016.

After a 10 percent drop in the total value of international seafood trade from 2014 to 2015, the projected 2016 figure of US$141.6 billion traded represents a partial recovery of 6.6 percent, with total traded volume remaining approximately constant across all three years at 60–60.5 million tonnes (live weight). However, the fundamental factors behind the apparent decline and subsequent recovery in value were largely different in 2015 and 2016. In 2015, the robust economic performance of the US economy, contrasting with sluggish growth in many other parts of the world, drove up the value of the US dollar versus a broad range of currencies and pushed down the US dollar value of trade conducted in those currencies. Whereas in 2016, with the US dollar stabilized, the increase in traded value was more the result of supply and demand dynamics pushing up prices for a number of important traded species.

In the bigger picture, the growing importance of domestic versus export markets in major producing countries in the developing world is reflected in the contrast between flat traded volumes and steady growth in total production. At the same time, global supply development continues to be defined by stagnation of capture fisheries production even as total supply from the world’s rapidly expanding aquaculture industry continues to grow at 4–5 percent per year. At the current rate, the seafood industry will lose its status as the only remaining food sector supplied primarily by natural ecosystems within three years. Indeed, if we consider fish utilized for direct human consumption only, we have been eating more farmed fish than wild since 2014. Given the fundamental differences between aquaculture and capture fisheries in terms of supply chains, cost structure, technology, risk factors, environmental impact, production control, marketing channels, product development, traceability and ecolabeling, the wider implications of this paradigm shift will continue to be the core focus of industry stakeholders for many years to come.

In the shorter term, supply and demand trends in international markets remain the primary concern for industry participants. Fundamentally, growth in real traded seafood prices even as total production volume rises points to strong demand growth for fish and fishery products. Historically, much of this growth has been attributed to income growth in developing regions, together with the associated rise in urbanization and consolidated retailers, but more recently, developed markets are again driving global demand trends. In 2016, it was the world’s largest single market for seafood, the EU, leading growth in seafood imports despite political uncertainty and some economic challenges. The Russian Federation and Brazil, once representing two of the fastest growing major seafood markets in the world, continue to weaken on the back of economic difficulties, although the future outlook for both economies is now somewhat more optimistic. Chinese growth is continuing at a somewhat slower rate, but an enormous and expanding urban middle class can be expected to compete on equal terms with US, EU and Japanese consumers for relatively more expensive species such as salmon, shrimp and wild whitefish in the near future. Meanwhile, India is still a relatively small market but with great potential on a steep growth trend, posting a 24 percent increase in seafood import value in both 2015 and 2016.

The Fish Price Index was up 10 index points in December 2016 compared with the same month in 2015, with the major contributor an 18 point rise in aquaculture species. More specifically, the main culprit is the continuing global farmed salmon supply shortage, which has pushed prices to record levels in international markets, although cod, herring, mackerel, octopus, squid, scallops, mussels and farmed shrimp also saw good price gains in 2016. Norway, China, Morocco and a range of shrimp producing countries in Southeast Asia and South America were major beneficiaries in terms of export revenues in 2016. The tuna sector saw raw material prices climb in 2016, but the this has had limited impact so far on canned tuna prices.

The coming year is one characterised by political uncertainty in both the EU and the USA, with Brexit and the Trump administration’s protectionist trade policy both developments that could potentially negatively impact seafood trade in two of the world’s largest markets. That said, it should also be noted that EU consumer demand has demonstrated considerable resistance to the ongoing uncertainties and price hikes up to this point, while the economic outlook for the USA and a number of important emerging markets is generally positive, suggesting that there is still significant potential for seafood demand growth in 2017. However, with the end of El Niño and forecasted production increases for a number of key species, the upward pressure on prices will likely be dampened by more plentiful supply.

The report analyses the market situation over the year 2016.

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