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GLOBEFISH - Análisis e información comercial en pesquerias

Peruvian’s bump harvest of anchovy: constant drop in prices

02/10/2017

The report analyses the market situation during the first quarter 2017

The year 2017 seems to be very positive for fishmeal and fish oil production as Peru reports good landings of anchovies, the main fishmeal raw material. Thus, exports of fishmeal and fish oil from South America greatly increased in contrast to last year. The price is soon expected to stabilize at the current level following a six-month downward trend, but in the foreseeable future, a price rebound is likely to occur.

Production

The second anchovy fishing season of 2016 in Peru (November 2016 to January 2017) in the north-central area, the most important fishing area in the country, reached a high level, with more than 98 percent quota met (quota set at 2 million tonnes).  In addition, for the first fishing season of 2017 (from April 2017 to July 2017), the quota (2.8 million tonnes) was up by 56 percent compared with the corresponding period in 2016. According to the market news, it is highly probable that this quota issued will be fully reached. Thus, any concerns over the supply shortage have recently been completely eliminated.

Following growth in Peru, global fishmeal output is scaling up, manifested by better performance in Chile and Scandinavian countries. For the first quarter of 2017, the production quantity in Peru (+179.4 percent), Chile (+117 percent), Denmark/Norway (+6.3 percent) and Iceland/North Atlantic (+42.3 percent) all reflected the abundant provision of high protein feed to the world.

 

Regarding fish oil, the pattern is more or less the same: during the first three months of 2017, Peru more than doubled its production quantity (+221.4 percent) to 24 145 tonnes, compared with the same period in 2016, followed by Chile (+43.9 percent) and Iceland/North Atlantic (+82 percent).

Export

Recently, the strong increase in fishmeal production gave rise to the growth of Peruvian exports of fishmeal and fish oil, allowing Peru to again be the supply hub for animal feed, an interesting feature in view of the constant loss of market shares since 2014. In the first three months of 2017, more than 280 000 tonnes of fishmeal were exported from Peru to China at a growth rate at 108 percent. In addition, Chinese feed industry absorbed 80 percent of Peruvian fishmeal exports.

The positive trend was witnessed not only in China, but also in Viet Nam (+240.9 percent), Chile (+396 percent), Japan (+245 percent) and Republic of Korea (+292 percent). It can be observed that global importers swiftly turned back to Peru once the supply normalized there. 

Different scenarios were seen in other traditional exporters. Chile slightly reduced its exports during the first three months of this year to 30 000 tonnes; the trade activities in Scandinavian countries levelled off to some extent, and even decreased, mainly because Norway reduced imports of fishmeal from neighbouring countries.

Exports for fish oil did not grow as much as fishmeal; minor increases of exports from Denmark, Peru and Norway did not necessarily change the trade pattern.

Market

Benefitting from the relatively low price, combined with the promotion strategy conducted by Peruvian feed producers in order to regain the losing shares in the market, Chinese importers were extremely active. From January to March 2017, China more than doubled its imports of fishmeal to 340 000 tonnes, an increase of 111 percent over the same period one year ago. Peru as a supplier accounted for most of this increase. The peak of the Norwegian salmon production, one of the main clients of Peru eventually dropped slightly in 2016, which was reflected in lower fishmeal imports, which slightly dropped, to 24 000 tonnes in the first quarter.

Prices

There has been a downward trend of fishmeal prices in Peru for some time. Some analysts say that it is the strategy of Peruvian feed producers for regaining the market, while some rumours referred to the general market rationale that excessive supply was putting pressure on prices.

It should be noted that the prices continued on a downward trend from last December, when it became clear that the fishing activities were much better than expected; to date, the momentum continues but much slower. In this regard, future price could be expected to lift to some extent be out of current downturn when as Peru gains more shares on global market. At the same time, the expansion of aquaculture will inevitably continue with increasing demand for high protein feed.

 

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