In the third quarter of the year, fishmeal production was characterised by very limited catches, normal features for this period of the year. However, also the overall 2008 production was reportedly short on the corresponding 2007 level. This is creating some shortage on the market, while the previous had been characterised by over-supply and declining prices. The main market, China, came back with strong buying interest, which led to relatively high prices in the second quarter. In the third quarter fishmeal prices tended downward somewhat, but much less than the ones of soybean meal.
2009 is not expected to bring much increase in fishmeal production worldwide; on the contrary, some declines can be forecast. Price developments depend on the demand from China, as already experienced in previous years. There are some indications that at least in the opening months of the year, this market will buy less, which should lead to somewhat lower prices.
Lower production
Fishmeal production continued to decline in the course of the year. At the moment, there is a halt of production in the Pacific area. On the other hand, European producers are getting close to the end of the fishing season, therefore not much movement is experienced on the production side.
New quota in Peru: same as last year?
In Peru, the fishmeal producers are expecting the verdict by a research vessel, the findings of which will be the basis for the quota of the November and December season. All observers go for a similar quota than last year (2 million tonnes). Spawning was delayed due to warmer waters than normal during July and August. There is a general expectation that the next season will start middle/second half November.
Peru managed to export higher quantities in 2008, after a difficult 2007. This recovery was caused by a strong Chinese market. In the first half of the year, Peru exported 870,000 tonnes, some 36% more than last year. China took the lion’s share of this shipment, accounting for about half of Peruvian fishmeal exports. In 2007, China had been very reluctant to buy, as inventories had built up, at times reaching 200,000 tonnes. In 2008, however, these stocks had been used up, and the country came back as an eager buyer. While the Chinese aquaculture industry experienced some problems in the course of 2008 and the aquaculture feed production was less present as importer of fishmeal, the pork industry was growing strongly. This was prompted by high prices of pork in the market. As a result, fishmeal imports went up, as did prices.
EU market bleak
The European fishmeal market continues to be very quiet. Buying interest is very low, given the high prices. German imports were 84,000 tonnes in the first half of 2008, some 30% less than in the same period of 2007. This decline was caused by fewer exports from Peru.
As a result of strong Chinese demand, fishmeal prices remained stable in the third quarter of the year, not following the downward trend of soybean meal prices. At the moment, the price level is US$1,190/tonne, about US$150/tonne ahead of the September 2007 price and only US$50/tonne below the July 2008 peak. The same comparison for soybean meal shows a US$80/tonne reduction in just two months.
Some downward movements in prices likely
This is a very difficult moment for any forecast, as the quotas in Peru still have to be fixed. It is indicative, however, that inventories are filling up in China. On the other hand, stocks are low in Peru. Taking the same fishing quota as last year’s 2 million tonnes as a base for a forecast, some price declines are likely to materialise in coming months, taking into account the reluctance of the European market to purchase at the present price level and the expected slowing down of Chinese demand for fishmeal in the near future.
