Global Aquaculture Update 2H 2022: On the Brink of Recession
Weaker seafood demand is expected in 2H 2022 compared to both 2H 2021 and 1H 2022. With softening demand, price corrections, and persistently high production costs, salmon and shrimp farmer profits are likely to decline from recent highs, In contrast, fish meal prices are likely to be supported by the high prices of alternatives.
Main highlights:
Seafood demand is expected to weaken 2H 2022. Production costs are persistently high, driven by feed, freight, and energy, with no reduction expected in 2H. Both salmon and shrimp prices will correct from record levels, while fish meal prices are likely to be supported.
Demand drivers:
Recessionary dynamics have already started in both the EU and the US in the midst of their Covid recoveries. Foodservice demand for seafood will cool in both regions, which means another switch back to retail. China is the most unpredictable factor in 2H 2022. Potentially, there is considerable upside for both shrimp and salmon, especially in Q4 2022, as long as Covid-related lockdowns and import restrictions are not reintroduced.
Supply drivers:
Salmon supply will improve in 2H, compensating for the supply contraction in 1H, though this year’s growth is still the lowest since 2016. Shrimp supply is expected to grow in 2H 2022, though at a decreasing pace as farmer profitability approaches breakeven. Despite a high first season quota, Peru’s fish meal production will not surpass 2021. Good production in other parts of the world is unlikely to offset the loss.
