Global production of fishmeal and fish oil in 2018 increased by over 90 percent compared to 2017. This growth was mainly driven by Peru’s soaring output that rose from 735?000 tonnes in 2017 to around 141?000 tonnes in 2018. Peruvian first fishing season of anchovy started on 12 April 2018 in the northern-central area, with a total allowable catch (TAC) set at 3.32 million tonnes, the highest since 2011. This quota was almost fulfilled by early July. According to the Instituto del Mar del Perú (IMARPE), about 10.9 million tonnes of anchovy were recorded in the fishing area before the start of the fishing season, exceeding the average of the past 25 years by some 35 percent.

In November 2018, the Peruvian government set the TAC for the second anchovy fishing season in the north and central region at 2.1 million tonnes. More than 98 percent of the allocated quota was fulfilled. A combined quota for the two seasons of 2018 thus totalled 5.42 million tonnes. This also confirms a normalization of climate conditions and favourable anchovy biomass. Apart from Peru, Chile and the United States of America also reported double-digit increase in fishmeal production to 371?800 and 342?500 tonnes respectively, both contributing to the high yield of 2018.

In regards to fish oil, Peru more than doubled its output of fish oil to 227?000 tonnes in 2018, from approximately 98?000 tonnes in 2017. Currently at the global scale, it is estimated that around 70 percent of fishmeal and fish oil products are reduced from wild captured whole fish, with the rest from by-products of aquaculture and wild capture. The proportion from by-products is likely to increase as a result of its high availability.

Exports

Peru is the main producer and exporter of fishmeal and fish oil, by a far margin over other producing countries. In 2018, Peru exported 1.03 million tonnes of fishmeal, about 72 percent more than in 2017. Nearly 80 percent of the Peruvian exports were destined for China. Japan and Viet Nam absorbed 5 percent and 4 percent, respectively. Chile bounced back to the second largest exporter of fishmeal with total exports reaching 227?700 tonnes in 2018. This was mainly due to the abundant biomass of anchovy in the South-Eastern Pacific. Denmark, ranked after Peru just in 2017, fell back to third place with most of its products shipped within Europe, to countries with marine fish farming, namely Norway (salmon), Greece, Italy and Turkey (seabass and seabream). Peruvian exports of fish oil reached 196?000 tonnes in 2018, some 18.6 percent more than in the same period in 2017. Denmark, Belgium and China were the main destinations for these exports.

Markets

China has consistently been the leading consumption market for fishmeal and fish oil, primarily because of its massive aquaculture industry. In 2018, Chinese imports of fishmeal totalled 1.47 million tonnes, about 7 percent less when compared to 2017, but still more than the 10-year average. Various incidents in China confounded the demand and supply of fishmeal. First, the environmental protection in China is becoming the priority over any business activities and as a result, many farming cages have been removed from open waters, which will impact Chinese aquaculture to a certain extent. Second, the African Swine Fever (ASF) in China, which has more than 100 reported outbreaks since August 2018, leading to massive deaths, is likely to have a negative effect on fishmeal consumption in the hog-farming sector. The scale of pig industry has been shrinking and that will probably cause a shift in consumers’ intake of animal protein to more fish and fishery products, which will in turn increase consumption of fishmeal and fish oil in aquaculture. Soft downward price trends of fishmeal gave rise to Chinese fishmeal stocks in the main ports and until January 2019 approximately 180?000 tonnes of fishmeal were stored in Chinese coastal areas.Norwegian fishmeal imports decreased by 13 percent from 193?400 tonnes in 2017 to 168?300 tonnes in 2018, following China and Japan, ranking as the third largest importers of fishmeal. Most of their imports were directed to the aquaculture sector.

Prices

After the beginning of the first fishing season in Peru in 2018, fishmeal prices began to normalize with a soft downward trend, fundamentally due to plenty global supply grounded on Peruvian bumper harvest. In addition, the biggest market, China, has held fishmeal stocks at a high point since mid2018, which has prevented Chinese buyers from purchasing more. Moreover, ASF occurrences in China also caused a stir for less demand from the hog-farming sector and impeded Chinese fishmeal imports from outside.

Outlook

Peru just initiated the evaluation of anchovy biomass for the first fishing season in 2019 and the result is yet to be released. However, the positive trend of fishmeal and fish oil supply registered in 2018 is likely to continue. With no additional adverse factors foreseen affecting the demand, the consequence of ASF outbreaks in China may have a negative impact, but to which extent still awaits the market to testify. In the short term, global demand and supply are in good balance with prices expected to stabilize at current level.