This year we saw negative outcomes for fishmeal supply due to that climate pattern, with El Niño conditions leading to the cancellation of the first fishing season in Peru, creating an acute shortage of fishmeal and fish oil.
“A quota of 1.68m metric tons was announced for the second fishing season, beginning on October 26, 2023, and although this was higher than initially expected it remains lower than the average of recent years,” according to the analysts, who citing NOAA, say a strong El Niño extending into 2024 is now expected with a probability of 60% to 80% during Q2 2024.
If this probability remains high, Peruvian authorities may announce minibans – these suspend fishing within certain areas during the approved season for days or sometimes weeks.
Such injunctions were common in previous El Niño years, and they can result in a reduction of the catch rate within the season. If they are introduced, then there will only be a marginal improvement on the tight supply of fishmeal and fish oil in the short term, noted the Rabobank report.
Price retreat potential
“If catch rates are significantly affected by minibans, fishmeal and fish oil prices are expected to only partially normalize and may need more than one good fishing season before they retreat toward the levels seen during recent La Niña years," reckon the analysts.
According to recent historical data, the price of fishmeal and that of soybean meal are correlated, with the fishmeal/soybean meal price ratio ranging between 3.5 and 4 due to the fact that it is possible, at least in theory, to substitute fishmeal for soybean meal in many aqua feed formulations, noted the team.
That ratio widened to about 5 in early Q4 2023 but given that soybean meal prices have stabilized, while fishmeal prices have increased, the high value of the ratio suggests fishmeal prices should correct, said the Rabobank experts.
"The potential for a price correction depends in part on catch rates during the second fishing season in Peru," they also acknowledged.
