“Since the start of the second 2015 fishing season in Peru, [which kicked off in November 2015], fishmeal prices had been declining, albeit from a high level [USD$1,700 to 1,900 per metric ton (mt)], noted Rabobank.
However, it seems that, in the last few weeks, nearly all Peruvian stocks have been sold and prices have stabilized and even recovered slightly to the USD$1,400 to 1,600 per mt range,” he told us.
High stocks in China and good expectations for slightly better fish meal production means prices are likely to be lower in 2016 than in 2015, said Nikolik.
“Better supply from Peru will be balanced with weaker supply from the rest of the world.
There is also some potential for weakness on the demand side due to contraction in the production of salmon in Chile and Norway and contracting pig heard in China,” he added.
The analyst also noted the hike in the number of start-up phase projects worldwide looking to develop a fish meal replacement due to the long term rising prices.
“Until recently, we have only heard about projects that could make one to five thousand tons of raw material by 2020. However, there are currently projects in the pipeline that, if successful, can even produce up to 100,000 tons [by then],” said Nikolik.
A noteworthy exception to the declining fishmeal production trend is the use of trimmings from the processing of seafood for human consumption by producers in China, Thailand and other regions to cover, at least, a part of the fishmeal supply, noted the analyst in an industry note on fishmeal production last year.
“Although, so far, fishmeal produced from trimmings has not been able to change overall decline in supply, it has become an important source and is mitigating the shortage,” wrote Nikolik back then.
Strategic ingredient
Speaking to this publication last year, both the IFFO and Rabobank noted that fishmeal has moved from being a commodity to a high priced strategic ingredient in feed.
The IFFO said it saw fishmeal usage now being about what it can bring during the really critical stages of livestock and aquaculture production.
The organization said, as a result, fishmeal manufacturers have been trying to add greater value to the ingredient as both farmed animal and aquaculture producers increasingly demand enhanced quality, freshness, providence and sustainability of supply to warrant the price.
Key changes that have added value to fishmeal in the last ten years include the introduction of steam drying technology: “This innovation has seen more control as regards the drying temperatures used in fishmeal production resulting in a more consistent product with a higher level of digestible protein,” said the IFFO.
Fishmeal producers are also highly focused now on the freshness of the incoming raw materials so that quality is not undermined, it added.
The kind of management in the fisheries and concerns over the use of forced labor in the fishmeal supply chain are also informing buying decisions, said the organization.