Although COVID-19 continues to upend the global economy, surprisingly, Peru has reported good progress in achieving the quota set for the first fishing season. Prices are stable so far, but ample supply may potentially exert downward pressure on prices over the coming months.

Production

In May 2020, Peru announced a quota of 2.41 million tonnes for the first fishing season in the centre-north region, up some 15 percent compared to the same season in 2019. The biomass assessment report from the Peruvian Maritime Institute of Peru (IMARPE) prior to the quota announcement of this season indicated very healthy anchovy stock in the waters, with over 10 million tonnes of biomass. However, the negative impacts of COVID-19 may upend the market with restricted transportation and preventative on-board measures to maintain social distancing.

Nonetheless, as of writing, over 90 percent of the allocated quota has been fulfilled due to the favorable climate situation and stable fishing activities. It is forecasted that if the current pace of fishing is maintained for an additional 10 days, there is a possibility to land the full quota. Nevertheless, July is usually the normal season for the spawning process, and IMARPE will advise the government to call for an end of the season.

Due to the pandemic, the fishing season in the southern area in Peru has not yet started, and local communities are calling for the start of the season to allow for some income. In the first six months of this year, Peru registered over 520 000 tonnes of fishmeal and oil production, down by 2 percent compared to the same period in 2019. Output from neighbouring Chile was less than half of the corresponding 2019 amount, totalling 240 000 tonnes. Combined production from

Denmark and Norway increased by around 16 percent in the review period, from 177 000 tonnes to 206 000 tonnes. Chile has overtaken Peru as the largest fish oil producer in the world, reaching 88 720 tonnes during January to June 2020. Peru, in second place, reported 75 000 tonnes of fish oil, down by 16.5 percent compared to the same period in 2019.

Exports

However, the impact of COVID-19 has not taken a toll in exports in the first quarter of the year, as the January to March period did not see a real global occurrence of the pandemic, and international trade was affected at a limited level. In the first quarter of 2020, total export quantity of fishmeal from Peru dropped by 51 percent, from 375 000 tonnes in 2019 to 183 000 tonnes this year. Along with logistical constraints in the region due to the pandemic, plunging exports to China mostly contributed to the dramatic decrease in trade.

It is likely that trade volume from Peru has sharply climbed in the second quarter of this year. As of writing, the first fishing season in Peru is still ongoing, and it will require months to translate the raw material into finalized product that is ready to export. In Chile, exports nearly doubled to 64 000 tonnes in the first quarter of the year, when compared to the same period of 2019. Traditional fish oil exporters have seen reduced exports, in particular Peru achieved merely half of what was exported in the first quarter of 2019.

Markets

Chinese fishmeal imports in the first quarter of 2020 decreased to 252 000 tonnes, a decrease of 20 percent compared to the same period of last year. Reduced imports from Peru were the main reason for this decline. The pandemic is not the only factor contributing to the slowdown of fish farming activities in China.

Heavy rains in the middle-south areas in China are disrupting the pond rearing and coastal cages, with many farms reporting huge losses. So far little signal of subdued precipitation has been seen, which may lead to further losses. It is not yet known how the crisis will reshape the aquaculture sector. 

Norway observed more or less the same amount of imports (26 000 tonnes) in line with levels reached in the same period of 2019.

Prices

Fishmeal and fish oil prices have both been on an upward spiral from the middle of last year. The early closure of the previous fishing season in Peru ended with only 35 percent of the total quota fulfilled. So far, prices have been stable as a result of changing scenarios, however, the pandemic is wreaking economic havoc globally. On the other hand, recovering demand in China and other economies resumed orders from the main producing areas.

Outlook

The first fishing season in Peru is very likely to be a success, so there is no big risk of shortage of supply, at least before the start of the second fishing season. The relatively good performance of the first fishing season in Peru has not immediately translated into price drops. Although a substantial proportion of fishmeal from this season has been presold with fixed prices, the industry is closely monitoring the COVID-19 impact on the farming sector. Still, it is possible that the high prices of fishmeal and fish oil may soften and decline slightly in the coming months.