Peru, Chile, Denmark, Norway, Iceland, UK, Ireland and Faroe Islands, the US, South Africa, Côte d'Ivoire, Mauritius, and Spain all saw a drop in production volumes for those feed raw materials compared to the cumulative output recorded for January through to August 2022.
The predominant factor contributing to this decline is the 70% year-on-year (YoY) decrease in Peru, said the marine ingredients organization.
El Niño conditions caused the cancellation of the first fishing season in Peru, creating an acute fishmeal and fish oil shortage.
“As for fish oil, total cumulative output in the first eight months of 2023 was 24% down YoY.”
Chile was the only country that registered a positive change YoY and that was a result of bigger catches and higher-than-average oil yields in the south of that country, reported the IFFO team.
Shift in Chinese consumption patterns
All fishing grounds are now open in China.
The Chinese aquaculture supply chain is currently grappling with increasing feed costs and weakened consumption of farmed fish and shrimp products, noted the IFFO.
“This can be attributed to the unstable global supply of feed ingredients and falling farm-gate prices for many species, stemming from unforeseen shifts in domestic demand,” continued the report.
In August, Rabobank warned that China’s record demand for shrimp imports would not repeat in the second half of 2023. “Weaker than expected demand has created large frozen inventories.”
El Niño in Peru, and the subsequent fishery closure, pose an acute challenge for the Chinese aquaculture industry, continued the Dutch bank, as the country sources 50% of its fishmeal from that South American market.
Likewise, the pig sector in China, a big user of fishmeal, continues to confront difficulties due to decreased demand during the summer months. “Although pig prices experienced a slight recovery recently in August, the pig market is expected to remain oversupplied throughout the remainder of 2023, largely due to the substantial sow stock.”
Market hopeful for recovery
Even though Peru’s first fishing season was cancelled, market watchers are hopeful that the impact will be contained to one season and a rebound will follow in 2024, according to Rabobank's outlook.
A fishery season in Peru has only been cancelled once before, in the second season of 2014, amid similar El Niño conditions.
“In 2014, the biomass recovered rapidly and Peru’s subsequent fishing season in 2015 had both a high quota and catch rate. The resulting supply recovery also normalized fishmeal prices to levels seen before the cancellation of the fishery,” commented the analysts.