Fishmeal prices have been trending downward. Its biggest market, China, has been facing uncertainties that include high stocks on ports, ongoing trade war with the United States of America, a weakening yuan and an Africa Swine Fever outbreak. 

Production

The first anchovy-fishing season of 2019 in the centre-north region in Peru ended with a total output marginally over 2 million tonnes, nearly 96 percent of the designated 2.1 million tonnes quota. For the first eight months of 2019, a total of 2.4 million tonnes of raw material were landed in ports along the Peruvian coast. This represents a 41.5 percent decrease from the same period of last year. The decline in raw material translated into an identical drop in fishmeal output in Peru, with only 564 100 tonnes produced between January and August of 2019 compared to 962 400 tonnes in the same period of 2018.

In contrast, the fishmeal production in Chile was stable at approximately 271 000 tonnes during the review period between 2019 and 2018, including fishmeal coming from the waste of the salmon processing industry.

There have not been any announcements for capelin quotas around Iceland and in the Barents Sea, as capelin stocks in Icelandic waters are in poor shape. These are important sources for fishmeal production and they are largely responsible for the slide in fishmeal production in Iceland and the North Atlantic during the first eight months of this year.

Fish oil production plunged during the first half of 2019, confirming the forecast. All producing countries reported output of less than 100 000 tonnes between January and August, with Peru and Chile totalling around 98 000 tonnes each.

Exports

Peru increased its fishmeal exports by 12 percent (627 000 tonnes) during the first half of 2019, compared with the same period in 2018, with 80 percent directed to the Chinese market. Asian countries, including also Japan and Viet Nam, absorbed more than 90 percent of the Peruvian fishmeal exports.

Peru increased total exports of fish oil by 41 percent to a total of 95 900 tonnes in the first half of 2019. Denmark exports of fish oil reached 72 800 tonnes, an increase of 14 percent compared with the same period of last year. About 77 percent of these were imported by Norway (56 600 tonnes).

Markets

In the largest fishmeal market, China, approximately 55 percent or 428 800 tonnes of fishmeal imports were sourced in Peru during the review period. This represents a 98 percent increase from the volume reported for the same period in 2018. Currently, the stocks at Chinese ports are at sky-high levels and trade has been low until Peru initiates its new season, possibly in November. According to the Marine Ingredients Organisation (IFFO), stocks in Chinese ports such as Shanghai and Guangzhou stood at around 300 000 tonnes in September, almost double than in September of
last year. This figure doesn't include stocks held by feed companies themselves.

More than half of the Chinese swine livestock will likely be lost by the end of this year due to an outbreak of African Swine Fever (ASF). This is one of the reasons why the fishmeal stock level in Chinese ports is so high, the second is the substantial increase in fishmeal imports from Peru. During the current interval between the first and second anchovy-fishing season in Peru, with nearly no landings, the high inventory will likely be consumed. Viet Nam is gradually becoming an important supplier of fishmeal to Asian countries, given its clear geographical advantage and processing sector. The rapid development of the pangasius and shrimp industry in the country requires a large amount of fishmeal input, so domestic fishmeal production would be a clear gain. However, a large amount of its fishmeal is still imported. During the first half of 2019, Viet Nam was the third largest importer of Peruvian fishmeal, following China and Japan.

Norway’s imports of fish oil increased by 27 percent from 74 900 tonnes in the first six months of 2018 to 95 200 tonnes this year. This rise was mainly shipped from Peru, with an almost tripled volume compared to the same period of last year.

Prices

Fishmeal and fish oil prices have been on an overall downward trend with occasional oscillations, after prices peaked at the end of 2014 as a result of a zero quota at that time. Fishmeal prices have been hovering at around USD 1 500 per tonne since June 2018, but there is a noticeable drop that started in June this year, mainly due to the high stocks in China, but also because of the weakening yuan.

The trade war between China and the United States of America has no clear end in sight, but fishmeal has been removed from the punitive list. The Chinese tariff on imported fishmeal from the United States of America is 2 percent again, but the impact of this change on global fishmeal and oil price is still unknown.

Outlook

With the first anchovy-fishing season of 2019 now over, IMARPE is conducting a biomass evaluation for the second fishing season, which usually starts in November. There is currently no reason to expect a weak second season in Peru, but the actual quota is still unknown. The price of fishmeal and fish oil has been decreasing and this trend is likely to continue considering the weakening yuan and Chinese high stocks. In addition, the tax to be levied on fishmeal exports by Peruvian authorities will compound the situation of global fishmeal supply.