Long-term fishmeal outlook by Cargill and Rabobank

The price trend for fish feed made with marine ingredients should decrease in the long-term due to the bearish outlook on raw materials, said Helene Ziv, risk management and sourcing (RMS) director at feed producer Cargill Aqua Nutrition, Switzerland.
Rabobank’s associate director animal protein Gorjan Nikolik, on the other hand, forecasted a rise in fish feed prices in the long-term, driven by growing demand from the aquaculture industry at North Atlantic Seafood Forum in Bergen.
Ziv forecasted that marine ingredients prices for fish feed, including fishmeal and fish oil, would be neutral in the short-term and bearish in the long-term. On the contrary, she forecasted an increase in plant oils prices, driven by tight rapeseed supplies in EU and China being almost done auctioning canola reserves, among other factors. The US biofuel policy remains an uncertain factor for those prices, Ziv also noted.
She pointed to a number of bearish drivers for fish feed prices, including expectations for upcoming fishing seasons, excess fish oil stocks in Peru, higher quotas in the EU (including for sand eel), and new ingredient replacements on the horizon.
Ziv also noted that low fishoil stocks in China, increasing focus on sustainable sourcing and a steady global growth in fishmeal demand were support factors for marine feed prices, but added that not all the arrows could point in the same direction.
Rabobank’s associated director drafted a different conclusion, Nikolik pointed to an overall intensification of aquaculture production for nearly all farming systems. Shrimp farming, for example, is one of the industries switching to a higher level of farming intensity.
More intense and modern aquaculture will increase the need for more formulated feed and consequently more fishmeal in most cases, he said. Despite the short-term recovery expectations, there has been a long-term decline in supply.
Nikolik agreed that long-term decline in fishmeal production should halt in 2017. He said that a better performance of the Peruvian anchovy fishery this year is likely to create a recovery of fishmeal global supply, although it would not return to historical levels, but would be higher than in the last few years.
“New volumes coming from Peru, following the end of El Nino, and higher volumes coming from Europe have been priced in during recent months,” Nikolik told Undercurrent News..
Despite a decline in fishmeal production over recent years, alternative ingredients for aquatic feeds had emerged. Future alternative feed ingredients could include krill, marine worms, algae, yeast-based ingredients, insect-based feeds, GM canola, among others, according to Rabobank’s analysis.
Nikolik said that combining the effect of the recovery from El Nino and alternative proteins, an additional 1 million tons of quality feed protein in the next five-six years is possible. Of these additional tons, 500,000t might come from additional fishmeal supply.
Nikolik said that fishmeal prices are therefore expected to enter a prolonged but temporary soft period, if indeed supply improves as expected.
But he noted that in the long-term he expected price support for fishmeal, driven by aquaculture growth and intensification, rise of new farmed species, protein demand from human and pet food markets and further long-term supply contraction of fishmeal.
The additional supply might not create a sharp drop in fishmeal prices in the next five-ten years, because demand will increase, Nikolik told Undercurrent.
But if supply from alternative sources and fishmeal substantially exceeds 1 million tons in the next five-six years, then prices could be pressured, Nikolik added, pointing out that he would not exclude Cargill´s scenario, which gave higher importance to an increase in feed supply from alternative sources.
Source: undercurrent