Aquaculture sector faces tough times, bank says

Economic and climate factors are set to make the second half of this year “the most challenging” period for global aquaculture since the peak of the pandemic in 2020, according to analysts at Dutch financial giant Rabobank.

Rabobank’s latest report, Global Aquaculture Update 2H 2023: Between a Rock and a Hard Place, warns that worldwide demand for seafood is softening, while feed costs are expected to stay high.

The report says that salmon prices have largely corrected to more normal levels but remain high compared to historical levels. The slump in shrimp demand may even get worse in 2H 2023 as Chinese demand softens.

And due to high fish meal and fish oil prices, aqua feed prices will not experience the correction that had been expected given lower soymeal prices. El Niño, a cyclical ocean current along the Pacific coast of South America that affects weather worldwide, has created conditions leading to the cancellation of the first fishing season in Peru. This, Rabobank says, is creating an acute fish meal and fish oil shortage. Aqua feed prices will be supported due to this scarcity of fish meal and oil, the report concludes.

On the demand side, the report finds, soft demand driven by inflation in the US and Europe is continuing, with salmon appearing relatively better placed than shrimp. Chinese demand is not recovering from the pandemic as fast as expected, resulting in low protein prices and high inventories. Fish meal and fish oil demand seem robust for now, but high prices will force rationing and substitution for many.

On the supply side, Rabobank expects that salmon supply will return to growth after nearly two years of contraction in Q3. The Asian shrimp industry, meanwhile, is facing a challenging period of record low prices due to oversupply caused by Ecuadorian growth.