The Fishmeal supply-demand situation between China and Peru decides the global outlook. Peru supply situation is strong and China is not showing any major signs of slowing down.
The Fishmeal demand is likely to increase in China in coming days as Aquafeed production season begins.
Regarding the supply side, Peru, Chile, the Northern European region and the African countries have reported an improvement in terms of available raw material in January 2021 with respect to January 2020 (Source).
With both supply and demand sides showing strength, its not easy to predict what will exactly happen but if the pig sector in China continues to increase the utilization of Fishmeal, we would likely see the price increase.
It is not difficult to understand the Global Fishmeal dynamics. The major exporters of Fishmeal in the world is Peru. China is the largest importer, of course.
China imports approx. 1.5 MMT of Fish Meal per annum. It imports nearly 50% of its requirement from Peru and Chile put together. Another nearly 25% is imported from countries like Vietnam, Thailand, Russia, Mauritania, USA etc. Clearly, it is the supply-demand situation between China and Peru which decides the global outlook.
In January, it was reported that Peru has closed second anchovy season at 88 percent of quota or a total of 2.44 million MT. The quota for next anchovy season starting in April is also expected to be good.
China also seems to be following the policy of importing from different countries apart from Peru in order to reduce its dependence on Peru. So, all other countries, where the plants have been approved for selling in China, will keep selling to China and will be the beneficiary of increased prices.
On a different note, there are environmental concerns about how China is using west African countries water resources to get Fishmeal in a non-sustainable way.
