Current Price Development for Fishmeal and Fish Oil

Peruvian quota, Chinese demand, and the price of soymeal all influencing factors

Fishmeal and fish oil are produced from fish that are not suitable for human consumption, such as sandeel, blue whiting, capelin, and Norway Pout, in addition to cuts from the fish processing industry.  Historically, fish oil was used to produce margarine, but today fish oil and fishmeal are mainly used in feed production for the aquaculture industry. 

Norwegian production of fishmeal has increased these last years. In 2019 fishmeal production exceeded 220.000 tonnes and fish oil production reached 73.000 tonnes. Estimated 2020 production is 240.000 tonnes of fishmeal and 80.000 tonnes of fish oil. The production highly dependent on the quota situation for the typical industry species. Global fishmeal and fish oil prices will affect the supply of raw material to the producers as it often affects the prices of forage fish. 

A slight increase in Peruvian fishmeal prices was noted in week 49. A large share of the fishmeal from the current season is already pre-sold, and producers still have a way to go before they have fulfilled their contracts. This put some pressure on prices. Since the Peruvian quota of 2,78 million tonnes was announced in November, the fleet has so far landed around 32% of this. With nearly 1,9 million tonnes left to be caught, we do not expect the quota to be fulfilled before the end of this year. Although the season last through January, previous experience has shown that good fishing days might be hard to come by in this period, raising concern that catches might fall short of the quota.  

Peru exports around 80% of its fishmeal to China, and the industry is therefore heavily influenced and vulnerable to any changes in Chinese demand, especially these coming months. Chinese imports from Peru decreased by 14% between January and October this year, mainly due to logistic problems caused by the COVID-19 pandemic. During this time, Chinese fishmeal stocks were heavily reduced, so Chinese producers now need to secure fishmeal for their seafood and livestock production. Imports strongly improved in September and October and it is reason to believe that Chinese demand will stay strong due to good recovery of the pork industry and a decrease in local produced fishmeal.  

Prices in the coming months are mainly dependent on the development in the Peruvian fishery during the next weeks. Another key factor is the strong price level seen in the main fishmeal substitute soymeal. The latest months’ supply from key soybean producers in South America has decreased, causing price pressure on soymeal. The latest four weeks soymeal prices were nearly 50% higher compared to the same period last year, and 3 times higher than fishmeal prices, a level not seen in many years. The high prices on soymeal will shift attention towards fishmeal as a feed ingredient. If Peruvian fishery happens to drop off or fall behind on the quota, the likely trend for prices is steady or higher. 

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Photo: Evannovostro, shutterstock