Day 3 of the webinar included Market Forum 3, starting with an update on global demand of fish oil by Dr Enrico Bachis, Market Research Director at IFFO.
In 2020, Peru was the main fish oil exporting country while Norway the biggest importer. Trade was driven mainly by the aqua sectors worldwide.
Globally, in 2020, the aqua sector consumed the biggest share of fish oil :70%. In 2021 a further recovery of the shrimp and salmonids consumption of fish oil is expected.
Petfood might also continue to grow, but this might not translate into a higher demand for marine ingredients given the competition from other sectors. Demand for crude oil by the pharmaceutical sector may not grow either, as the demand is moving from crude oil to concentrates.
In 2020 Europe and Latin America dominated with their aqua sector with a combined consumption of 55% but Asia followed suit with 30%. In 2021 and 2022 we don’t expect significant changes in the geographical breakdown of fish oil consumption, unless of some unexpected shocks in the shrimp and salmonids sectors.
Moving to fish oil trade, Christian Meinich, Managing Director at Chr. Holtermann AS, explained that, looking at fish oil supply and demand, there is a general trend of continued price rises. This has been driven by disruption in certain markets such as hurricanes in the USA and sea temperature rises in West Africa. World fish oil production remains stable but the Peruvian and Icelandic markets are the ones to watch.
Regarding the consumption from alternative sources of EPA/DHA, algae-based products have seen a steady rise since 2019, but have still not reached a sizeable factor. For Land based salmon production, the sum of projects remains high and increasing (exceeding 1 mill mt production capacity) but the actual implementation remains slow; and there have been operational challenges during 2021 (for instance Atlantic Sapphire with restrained acess to oxygene due to covid-demand).
With rapeseed oil, the market remains strong but has been affected by the global energy crisis and the poor Canadian canola crop due to heatwaves. The narrowing price gap down to rape seed oil could have a potential effect on feed reformulations. In summary, there is a potential for balanced markets 2021 and there could be slight oversupply 2022.
Looking at the Omega-3 market, Aldo Bernasconi, VP of Data Science at GOED, underlined that the Omega-3 market has faced unusual forces due to ongoing COVID 19 pandemic. He mentioned an increased focus on health supplements to prevent illness, along with other factors such as economic uncertainty, restrictions to customer movement and logistic challenges. Omega-3 ingredient demand grew at 1.0% in 2020 and is expected to grow by an additional 1.3% in 2021, with this increasing to at an average of 2.6% by 2025. Higher shipping costs and barriers to obtaining supplies and services has accelerated the replacement of refined oils by concentrates in established markets. Economic uncertainty, production and trade problems kept refined oils from growing in developing markets (particularly in Asia).
Demand for EPA+DHA grew faster than the demand for ingredients, but growth varied by region and this is a very unusual pattern. Most of the additional ingredient demand went to dietary supplements and all applications grew, except for pet food, which contracted slightly. In terms of percentage of their volume, the fastest growing application was pharmaceuticals, with infant formula growing slower than in previous years, partly due to lower birth rates in China. Crude oil demand continues to grow, driven mostly by pharmaceuticals. The majority (65.0%) of crude oils used for omega-3 products comes from anchovies, sardines, and forage fish species, the volume of these crude oils grew 3.2% in 2020.
The COVID pandemic has resulted in increased consumer interest in prevention. In the US, this has created short-lived, news-driven jumps in demand. In other markets, including Europe and LATAM, there is a general increase in demand for supplements. There has also been a move to online channel caused by restrictions in movement, with sales on Amazon of omega-3 supplements grew by 41% in 2020 in the USA.
Vascepa (a medication to lower CV risk) continues to grow in the US, but the introduction of generics may slow that growth and Vascepa is also being introduced in Europe. The growth of this product will increase the demand for EPA-rich oils. There are several candidates of omega-3 drugs which are in the approval pipeline in China. It is estimated that 244 million Chinese have high triglycerides, and cardiovascular diseases are responsible for almost 4 million deaths per year. In conclusion, demand is growing, but logistic issues and low inventory make it difficult to meet that demand.
Market Forum 3 ended with a presentation on shrimp farming in Ecuador delivered by José Juez, General Manager, Shrimp Division at NIRSA.
Since 2000 and the White Spot Syndrome Virus (WSSV) crisis in Ecuador, recovery was slow until 2006 and then growth quickly accelerated by 564% between 2006 and 2020. This successful recovery has been driven by a range of factors including: efficient pond stocking (balancing wild larvae vs hatchery larvae); stocking densities, aerator usage, automatic feeder; and recirculating pond systems. Export markets have also expanded beyond just the USA, to both Europe and Asia, which has allowed for more growth in the sector.