RaboResearch: 2023 is year to forget for shrimp industry, acute fishmeal shortage forecast, salmon supply back on track

The Asian shrimp industry is facing a challenging period of record-low prices due to oversupply caused by Ecuadorian growth, report the analysts.

The slump in shrimp demand may even get worse in 2H 2023 as Chinese demand softens, they warn.

In fact, 2023 can be seen as a year to forget for the shrimp industry, according to Rabobank. 

Salmon prices have largely corrected to more normal levels but remain high compared to historical levels: “After nearly two years of weak supply, salmon will experience a period of more normalized supply starting in H2 2023.”

A possible challenge for the salmon industry for the rest of this year will be the shortage of sustainably certified fishmeal and oil, said the aquaculture market specialists.

El Niño conditions caused the cancellation of the first fishing season in Peru, creating an acute fishmeal and fish oil shortage. Aqua feed prices will be supported in H2 2023 due to this scarcity of fishmeal and oil, forecasts the publication.

Regional outlook ​

South America ​

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.

“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.

All eyes will be focused on Ecuador and Chile to see how El Niño impacts their respective shrimp and salmon aquaculture industries, added the team.

Ecuadorian producers can expect a challenging H2 not only due to weaker Chinese demand expectations but also the risk of El Niño bringing heavy rains and possible flooding, potentially tempering the record supply growth Ecuador has had so far in 2023, they noted.

Southeast Asia ​

Asia’s shrimp industry is entering what could be the most challenging period since the outbreak of early mortality syndrome (EMS) in 2011, believe the analysts.

Persistently low prices and high costs have made shrimp farming unprofitable.

“The supply contraction that started in H1 2023 is likely to continue and, at least for India, accelerate as virtually the entire industry is operating at a loss per kilogram sold.”

A stable supply correction is needed to balance the market, said the analysts.

North America​

US demand for shrimp remains soft despite low shrimp prices. Current prices of shrimp in the US are at a ten-year low and even bellow the low point of the 2020 Covid lockdown period.

US salmon prices have normalized from record levels on better Chilean supply. “We do not expect any further price softness for salmon in the US in H2 2023.”

Europe ​

The European salmon industry is currently the most profitable aquaculture industry in the world. Even with somewhat lower salmon prices in H2 2023, it will still perform strongly, maintains Rabobank.

“The 25% resource tax in Norway is now a reality and will have a negative effect on sector growth, at least in the near term.”

China​

China’s record demand for shrimp imports will 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, will pose an acute challenge for the Chinese aquaculture industry, which sources 50% of its fishmeal from that South American market, according to the outlook.