20 October 2021
Day 2 of the webinar started with Market Forum 2, covering global market trends as well as updates on China, Peru and major farmed species.
Update on China - Maggie Xu, China Director, IFFO
Substantial decrease expected in 2021 in white fishmeal production
Following a nationwide crackdown on overfishing over the past few years, including fishing moratoriums and aggressive policing, China wild-catch output shrank 5.4%, according to MARA fishery statistical yearbook. Imports of pollock from Russia have been badly disrupted by the extremely tight sanitary checks for COVID-19 virus traces on the importation of seafood. Pollock processing of China had lost competitiveness already, given continuously rising costs on labour, environmental protection and financing. The prospects of this sector are believed to be worrisome by Chinese analysts. The by-products generated from the pollock filleting are traditionally used to produce fishmeal and fish oil in northern and eastern China. A substantial decrease is thus expected this year in terms of white fishmeal produced here.
Ageing population in rural areas and ASF speeded up the consolidation process in China’s pig farming sector. It is the vertically integrated pig farms that lead the capacity expansion in past couple of years. MARA estimates the scale-up rate to have reached 57% by end of last year, 4% higher over the previous year.
Consolidation is also the direction for China’s aquaculture sector, of which 90% share is currently hold by SMEs. Stricter environmental protection requirements and digitalization upgrading will for sure get rid of inferior enterprises. On the other hand, imported fish and seafood could be looking at higher freight costs due to port congestion brought by COVID-19-related shutdowns or stricter disinfection requirements. Now it takes up to four weeks to get products through Chinese customs, compared to about three days in pre-COVID times. Domestic seafood might enjoy stronger demand but higher aquaculture feed prices drove seafood prices up during the fishing ban season thus drove consumers to pork, which had dropped in price this year. And climate change is hitting China’s aquaculture sector. Dryer weather in the first half of 2021 in southern China mat many ponds could not be used. Although July and August are traditional aquaculture high season in China, high temperatures and typhoons tend to trigger disease outbreaks and disrupt aquaculture too.
Coronavirus also challenges domestic feed logistics, the freight charges of which could go up by 50-60%. Road closure prolongs shipping time too. On the other hand, normalization is guaranteed by national policies for agriculture production materials to have priority over other traffic. Annual feed production growth is expected by China Feed Industry Association to exceed the good level in recent years.
Update on global demand of fishmeal - Dr Enrico Bachis, Market Research Director, IFFO
Further growth of the shrimp, pig and pet food feed consumption of fishmeal expected for 2021
In 2020, Peru remained the main fishmeal exporting country, while China (meal) the biggest importer; and no changes to this are expected in 2021 and 2022. Globally, in 2020 it was the aqua sector to consume the biggest share of both fishmeal (86%). In 2021, no changes expected other than a further growth of the shrimp and pig feed´s consumption of fishmeal; pet food might also continue to grow. In 2020, Asia and China consumed more than 70% of the global fishmeal, mainly because of the aquaculture, although the highest growth rate was reported by the pig-feed (in China) and petfood (worldwide). In 2021 and 2022 pig-feed might increase its global share thanks to China, although it will depend on a recovery of the swine sector prices (currently subdued in China).
Update on Peruvian marine ingredients trade - James Frank, Director, MSICeres S.A.C
2021: Blockbuster year in Peru
James Frank, Director at the trading company MSICeres, praised the resilience of the Peruvian industry as it is undergoing its 4th season of the Covid pandemic and experiencing a freight crisis due to uncompetitive shipping by container to Europe.
Good fishmeal production in Peru is supported by strong anchovy biomass and fishing. Quotas at 30% of the biomass are expected to be announced in November, with the worst-case scenario being at 1.5-1.8million metric tons.
90% of demand for Peruvian fishmeal comes from Asia with China exports at historical levels: +53% in 2021 compared with 2020. Germany, the first EU exporting country, has seen an increase by 83% in 2021 vs 2020, whereas in Chile, volumes are minimal: -69%. Exports to Australia are expected to recover late 2021.
Update on major farmed species - Gorjan Nikolik, Senior Analyst - Seafood, Rabobank
Recovery of the Chilean salmon market expected in 2022, good news on shrimp coming from the US, Ecuador, Vietnam
Starting with salmon, the Norwegian market has had a strong year while the Chilean market has contracted. A weak global salmon supply growth is expected for 2021, with gradual improvement in the following years and with the peak of the supply contraction expected in Q4 and recovery expected in Q1 2022. Prices are back to normal with high prices potentially on the way for most of Q4 2021. Salmon is a relative winner in the Covid crisis with increasing at home consumption, and as food service continues to open up, Rabobank expects a good demand environment in 2022.
In Norway, there has been both steady and profitable growth, despite being license constrained, which can expand up to 6% even two years. The Norwegian industry has invested heavily in large smolt hatcheries and smolt size will increase for at least 5 more years. Large smolt and offshore are both a natural evolution in salmon farming in Norway.
In Chile, the market has been volatile, depending on the US has its ups and downs. For Chilean salmon production, there was an inflection point in May, with low supply expected for the rest of the year. The outlook is that Chilean recovery will drive supply in 2022, but this will likely be balanced with good demand.
China’s shrimp market has been heavily impacted by Covid and is still below 2019 performances. China has not reached its pre pandemic levels when it comes to imports. The US Market is booming with shrimp the winner seafood at retail and is on a long-term growth path. “Ecuador is the super star of Latin America’s shrimp production and 2021 will be a phenomenal year. Ecuador has been able to pivot and add value to its products”.
It looks like India, another giant of the sector, will create a new record in supply growth this year. Shrimp prices in India are largely holding up despite the huge volume of exports. In Vietnam there was a good performance in both 2020 and H12021 despite Covid lockdowns, with a trade deal with EU helping balance exports to all the main markets. Indonesia, which has a very big domestic shrimp market, had a strong 2020, with Q1 diverging shrimp from the domestic market to the US. Growth seems to be slowing down, and dependency on the US retail is a benefit in 2021, but a long-term risk.