Aquaculture will continue to lead the increasing supply of seafood available for human consumption in the year ahead, but its overall rate of production growth is slowing down, claims a new report compiled by Rabobank.
The “Global Animal Protein Outlook 2018” estimates that the volume of seafood produced through aquaculture this year and next is in the range of 3 to 4 percent, while the wild catch sector should have recovered from one of the longest and most severe El Nino periods to expand by 1 to 2 percent over the same time period.
Rabobank said fisheries in the Western Pacific – from Patagonia in Chile to California in the United States – have been recovering in 2017, generating a catch a few million tons higher than in 2016 and that this recovery should continue at least in the first-half of 2018.
With regards to aquaculture’s expansion, an expected slowing or stagnation of production in China, the largest producer, is being more than offset by new growth regions, especially in Southeast Asia, Latin America and Africa.
India is an example of a rapidly growing export-oriented aquaculture producer that has been doing very well this year, said the report.
In terms of species, farmed salmon and shrimp have seen good growth this year and will be the key drivers through 2018, although not to levels that will crash prices, while other aquaculture sectors have seen their progress stall, Gorjan Nikolik, associate director of animal protein/seafood with Rabobank International, told SeafoodSource.
“Certainly, freshwater fish production like tilapia and pangasius as well as the huge fish farming industries in China are seeing a slowdown, which means that overall, aquaculture will be an industry that continues to struggle to meet demand so prices will remain fairly strong,” he said.
The report states that salmon farming in both Chile and Norway experienced a reversal of fortunes in 2017, with growth resuming after a record contraction due to the algae bloom in Chile and Norway’s producers challenged by increased sea lice resistance (both in 2016). Rabobank expects the salmon supply to grow by about 5 percent this year and to see a slightly higher rate of growth in 2018.
The last-quarter of 2017 and the first-half of 2018 are expected to see strong supply growth, and some months could reach double-digit growth, said the report. However, legislative constraints, especially in Chile, will cause supply to drop below long-term demand before the end of 2018.
New record salmon prices were seen globally during H1 2017 – breaching the NOK 70 (USD 8.54, EUR 7.19) per kg mark for a second and third time – but by the end of the summer, prices were back below 2016 levels.
The peak of the cycle has now passed, said Rabobank, which expects somewhat lower prices for 2018 despite constrained long-term supply and good global demand.
It does not expect prices to fall to historical averages. If there is a price correction, it will probably occur in late summer 2018 and be short-lived. Salmon prices are therefore expected to be in the range of NOK 50 (USD 6.10, EUR 5.13) to NOK 65 (USD 7.93, EUR 6.67) per kg next year and to remain as volatile and unpredictable as they have been in recent years.
Furthermore, the Chinese market is expected to quickly gain importance as the salmon sector recovers, highlighted Nikolik.
“The elements that have hindered salmon’s growth in the Chinese market are being ironed out. Norway had more or less abandoned that market and while Chile stepped in, it was not able to supply to the same level as the Norwegians had. Currently, the Norwegian market share in China is in the region of 25 to 30 percent, but with the trade relationships between the two countries improving, the expectation is that Norway’s market share could rise to 65 or 70 percent.
“This won’t be at the expense of Chile; it will be in addition to Chile. There are some people expecting as much as 25 percent growth in the Chinese market starting next year. That’s bullish but it could happen.”
Meanwhile, India and Ecuador helped the shrimp farming sector resume moderate growth this year and the two countries’ momentum is expected in 2018, with hopes that Indonesia could join their ranks as a significant growth driver.
This year’s production growth – taking the global supply to around 3.5 million metric tons (MT) – was matched with equal demand, resulting in prices slightly higher than the long-term average. These trends come at a time when a number of high-end seafood and meat products have reached or are close to reaching historical highs. Rabobank believes this to be “demand-creating” for the shrimp industry, and at current levels, good demand for shrimp can be expected next year.
“We think that the global shrimp industry is very elastic and that there is a lot of room for growth. There is industry growth in India, while Ecuador, with its relatively small geographic area, accounts for 50 percent of the shrimp coming out of South America. However, if prices were to go up slightly then production elsewhere could also increase.”
Nikolik said that Indian shrimp has been well received in the Chinese market this year, with exporters/producers focusing on the market amid fears that antibiotic residue claims being made in European markets could lead to restricted access to the bloc. This supply trend is expected to continue through 2018.
He also highlighted that Vietnamese pangasius producers have been betting big on the Chinese market for the coming year after a successful 2017.
“Pangasius is an interesting case because until now we didn’t know that an non-premium imported whitefish could be successful in China. This raises the question that if pangasius can do this, what could be the potential of Alaska pollock in the market? Product for product, pollock is priced quite competitively to pangasius, but it also has a considerably better image and it is a wild fish.”
He explained that because China is a processing and re-export hub, it is very difficult to establish the country’s consumption of pollock, but there are observers who believe that more pollock is probably staying in China than in previous years.
