Fish meal market update

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Five months ago, the outlook for the world fish meal market was for a record second fishing season in Peru with a 2.79 million tonnes anchovy quota, the largest ever for this season, with about half being already pre-sold. At more than 187,000 tonnes, fish meal stocks in Chinese ports were 50% higher than the three-year average and imported fish meal prices in China were the lowest in many months. Large stocks and low prices on the demand side with ample future supplies gave the basis for a “bearish” 2020 fish meal market outlook with FOB Peru prices quoted at about USD1,300/tonne for the “super-prime” quality and RMB 10,000/tonne ex-port storage in China. (Figure 1)

But as we enter the month of May 2020, the situation is just radically different. The second 2019 fishing season in Peru was stopped three weeks ahead of schedule on account of excessively large juvenile counts in the catches and only 36% of the quota was landed, corresponding to a mere 232,000 tonnes of fish meal production and less than 30,000 tonnes of fish oil. During the first trimester 2020, the outlook for the first 2020 fishing season in Peru was uncertain.

Then came the Covid-19 lockdown in Peru which practically paralysed the country since March 12. Both the start of the next fishing season and the corresponding fishing quota were unknown until the May 8 publication of a ministerial decree authorising the opening of the fishing season on May 13 th with a global quota of 2.41 million tonnes, well above the general market anticipation of 2.0 million tonnes. However, at the same time very tight sanitary protocols were established raising much uncertainty as to whether such quota could be completed.

In China, fish meal stocks in ports decreased sharply as the country was coming out of its own Covid-19 lockdown. Demand from those stocks was large during April and prices rose accordingly. The current outlook for the key Peru/China fish meal market has turned firm with prices quoted in Peru at around USD1,700/tonne FOB but without transactions and RMB 14,000/tonne ex-port storage in China.

Fish landings in the five key fish meal producing countries have been modest to poor so far in 2020 (Figure 2). Despite a slow first quarter 2020, fishing in Chile should recover as the overall annual fishing quotas are up about 10% year on year. But it remains to be confirmed whether effective landings will be up to the quotas. In Scandinavia, despite the lack of the important capelin landings for the second year in a row, total 2020 landings are expected to be only slightly below the level of the previous year. In other producing countries, much uncertainty prevails.

In a nutshell, the world fish meal market will likely continue to be firm as we see continuing overall supply tightness only counterbalanced by weaker demand on account of the indirect effects of Covid-19 lockdowns all over the world in the first half of 2020. However, on the other hand, it should remain much more stable than other commodity markets.

Figure 1. Imported fish meal prices (Standard & Super-Prime) in Shanghai (ex-port warehouse) from January 2019 to May 2020 compared with previous year (in RMB/tonne).
Figure 2. Peru/Chile/Scandinavia*- Cumulative landings of major species for meal & oil from January to May 2020, compared with four previous years (in tonnes of raw fish).

 

Jean-Fran├žois Mittaine is with the Fishmeal Experts Office, Paris, France and is the Co-editor of “Fish Oil & Meal World.” In November’s DSM 2019 aquaculture conference, he presented on “Fish meal and fish oil-insights and projections”.

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