Why is the fishmeal market once again failing to thrive in peak season?
It is now early July, and the fishmeal market is about to enter its annual peak consumption season. However, judging from the current situation on both the supply and demand sides of fishmeal, this year's fishmeal market may continue to play out the curse of a peak season that fails to thrive.
During the two years of 2013 and 2014, in the peak aquaculture season from July to September, fishmeal prices weakened and declined, showing a situation of a peak season that fails to thrive; instead, upward price movements occurred at the beginning and end of the year.
At the end of June in 2013 and 2014, the price of super prime fishmeal was both around 12,500 yuan per tonne, while by the end of September they were 10,500 yuan per tonne and 11,900 yuan per tonne respectively, down by 2,000 yuan and 600 yuan.
And this year, we are about to enter these golden three months, but at the end of June the quote for new Peruvian super prime cargo was 13,500 yuan per tonne. How will the fishmeal market perform?
Greater sales pressure in the Peruvian fishmeal market
According to the author's understanding, as of the end of June, Peru had pre-sold about 230,000 tonnes of fishmeal, with about 400,000 tonnes still awaiting sale, putting greater pressure on sales. From the continuously declining external market, one can also see the anticipation of Peruvian fishmeal manufacturers for Chinese buyers to enter the market. As of now, Peruvian super steam-dried fishmeal is at 1,650 USD per tonne CNF, down 750 USD from last year's high of 2,400 USD per tonne. But in terms of effect, the response from fishmeal buyers has been average; although buyers from China, Japan, Chile and elsewhere have entered the market, the situation of large sellable inventories in Peru still dominates. Therefore, for the outlook, most fishmeal industry players believe there is a relatively large chance that the external market will be lowered to 1,600 USD.
Domestic aquaculture situation unclear
Earlier, when we looked at El Nino, many institutions and experts said that the El Nino weather conditions China faces this year would reduce typhoon activity. But this year China's first typhoon came even earlier than in previous years, making landfall from Wanning, Hainan on June 22, with Hainan, Guangxi, Guangdong, Yunnan and many other regions hit by heavy rain, gradually ending on June 25. But based on the current situation, there is still no specific data on the impact on aquaculture, though overall the impact is expected to be limited.
In May this year, Guangdong experienced frequent rainstorms, and the success rate of shrimp farming was relatively low, not exceeding 30% in most areas, seriously affecting fishmeal demand in Guangdong. After entering June, the weather tended to stabilize, and from mid-to-late June, sales of most aquatic feed improved somewhat, and fishmeal inquiries and purchasing became somewhat more active.
But for the imminent peak aquaculture season, weather plays a crucial role, and the current situation is still hard to call clear.
Feed enterprises' adaptability has increased
After feed enterprises went on a buying spree for port spot goods in May 2012, feed enterprises seem to have rarely fought unprepared battles again. Especially after last year's zero quota, most feed enterprises adopted a procurement strategy combining external market, spot, domestic and substitutes. Especially at present, compared with spot goods, the external market offers extremely outstanding value for money, and many feed enterprises are waiting for the right opportunity to enter the market.
According to the author's understanding, some feed procurement took place at the 2,000 USD, 1,800 USD and 1,700 USD thresholds, and compared with traders, feed enterprises accounted for no small proportion.
The recent decline in prices of some high-grade aquatic feed was affected by the decline in fishmeal prices. Due to falling raw material prices, snakehead feed fell by 200 yuan to 300 yuan per tonne, California bass feed fell by 300 yuan to 600 yuan per tonne, and starter feed was lowered by 600 yuan per tonne, with the decline ranges of major enterprises roughly the same. Regarding this price decline, industry insiders said that on the one hand it was due to expectations of a bearish fishmeal price, and on the other hand it was due to the sluggish snakehead market, with price cuts intended to reduce the pressure on farmers.
The market was previously still struggling with this question: the arrival time of cheaper external cargo at port is already the end of August, so during the peak aquaculture season in July and August, will feed mills have enough fishmeal? Now that July has already begun, feed mills' purchasing enthusiasm has risen somewhat, but no large-scale purchasing peak has appeared. In this race against time, feed mills clearly have relatively ample confidence.
Peru's next fishing season in north-central Peru will decide everything
Likewise, Peruvian fishmeal plants are anxiously waiting for Chinese buyers to enter the market; once the peak aquaculture season passes, Peru's large amount of fishmeal will also have "no place to be used." Of course, this is under the premise that no extreme quota situation occurs. Therefore, the Peruvian fishmeal market has also been focusing on Chinese feed mills' consumption during the domestic peak aquaculture season and the situation of Chinese buyers entering the market to purchase.
It is understood that some large feed enterprises currently need to prepare for September demand. Although most factors on both the supply and demand sides currently point to bearishness, if news of a tiny quota comes from Peru's next fishing season in north-central Peru, or if the sales mentality of Peruvian fishmeal plants changes, then the market may turn around. And these things still need time to verify.
In short, in this year's peak aquaculture season from July to September, the fishmeal market may once again find it hard to thrive in peak season.