Increased demand and limited volume available keep fishmeal and fish oil prices up in the first half of 2014.

While Peru’s total allowable catch (TAC) for anchovy for the 2014 winter was set at 2.53 million tonnes, 23% more compared with the same time period for 2013, the actual catch was lower than expected. Fortunately, the pressure on the prices from the short supply was offset partially by delayed buying decisions due to weather uncertainty indicated by abnormal sea temperatures. Nevertheless, fishmeal prices again showed a significant increase beginning in June when buyers realized that the TAC quota would not be met this season. Going forward, El Niño effects are less likely to hit the industry as severely as anticipated at the beginning of the year. Strong demand from aquaculture and animal farming will uphold the market in the long-term, while countries increasingly seek supply diversification.

Production 

During the first half of 2014, total production from five of the major fishmeal producers registered at 1 107 000 tonnes, a slight increase compared with the same time period in 2013 and 2012. Despite the early start, the anchovy catch in Peru was very low mainly due to the abnormally high sea temperatures forcing anchovy stocks to deeper and cooler waters or to the south where industrial catches were prohibited within a 10 mile zone. A short ban to suspend fishing operations for a few days due to high juvenile levels worsened the situation further. Even with an extension to 10 August, only 1.71 million tonnes were caught, accounting for just 68% of the TAC. For fish oil, production was in a similar situation with only slightly higher volume reported for the first half of the year when compared with the same time period in 2013. However, 2014 volumes remained lower than the average of years before 2013. The fish oil yield had been very low this season as the fish have had a low fat content. 

Exports

For fishmeal, although Peru doubled its export volume in the first half of the year, it was still lower than what was exported for the same period in most of the years before 2013. China imported the majority of fishmeal, taking almost 60% of Peruvian exports. Viet Nam became the fourth largest destination for Peruvian exports right after Japan, which is diversifying its fishmeal supply sources to include African countries in order to reduce the high cost triggered by yen’s depreciation. In Chile, the growing salmon and shrimp farming sector consumed a significant amount of fishmeal traditionally destined for export, and as a result, Chile exported less fishmeal during the first half of 2014 than compared with the same time period last year.

In terms of fish oil, the USA exported 42 900 tonnes of fish oil in the first half of 2014, most of which originated from gulf menhaden. It is anticipated that the menhaden fishery will maintain its high level of fish oil supply and export because of a positive stock assessment. Peru almost tripled its fish oil export, reaching 84 900 tonnes.

Markets

Germany

Germany reported 100 000 tonnes of fishmeal imports in the first six months of 2014, which was relatively stable. The majority was supplied by Peru at 61 700 tonnes. Both Morocco (-75%) and Iceland (-93%) significantly reduced their exports to Germany. 

USA and UK

The USA and the UK imported slightly more fishmeal during the period. For the UK the major origin was Peru while for the USA it was mainly supplied by Chile.

Prices

Starting at the beginning of 2014, fishmeal prices began to increase again, staying firm beginning in March/April. The market stayed quiet as buyers were reluctant to confirm orders while weather uncertainty still lingered. In addition, according to Undercurrent News, China had preemptively built up considerable fishmeal stock of about 253 000 tonnes. From June onwards, fishmeal prices strengthened quickly as it became clear that the quota could not be achieved during the season. Indeed in September, the super prime fishmeal reached USD 1 900 per tonne FOB Peru (Source: Undercurrentnews). Fish oil prices continued to increase although prices were still lower than what was registered during the same period of 2013.

Soymeal prices were relatively stable during the period. It is expected that its substitution role for fishmeal will continue to strengthen.

Outlook 

In the long-term, growing demand from aquaculture and the terrestrial farming industry will continue to push up prices of both fishmeal and fish oil. In the near future, China will demand more super prime fishmeal for their pig farms before the Chinese New Year. Japan and the Republic of Korea will also be seeking increased supplies in order to feed eels and other high value fish. Increasingly,  countries will begin to diversify their supplies from non-traditional suppliers. Production from by-products of processing will also definitely grow.

In terms of Peruvian stocks, Peru’s El Niño institute ENFEN said the El Niño phenomenon affecting catches should lessen in August with little risk of returning by the end of 2014. With the low catches of anchovy in the past season, it was expected that a second season’s quota would be around 2 million tonnes. However, recently Peru’s marine institute IMARPE advised not to open the country’s second anchovy fishing season, at least until another survey is carried out in November. This advisement is a result of survey findings that estimated very limited anchovy biomass at just 1.45 million tones in the north-center region of Peru. 

More and more studies demonstrate that the health benefits of farmed salmon are hardly reduced by cutting the amount of fishmeal in the salmon diet. These findings may encourage farmers to apply more substitutes such as rapeseed oil and soymeal in the future in order to respond to the rising prices of fishmeal and fish oil while not compromising the health benefits of their products.