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INTERVIEW: Evolution of the Global Salmon and Shrimp Sectors in the Past Year and H2 2022 Outlook

Source: Feedindo Logo Final

2 August 2022 - Weaker seafood demand is expected in the second half of this year compared to both the same period last year and the first six months of 2022, according to a new report from RaboResearch Food & Agribusiness. 

It is expected that salmon and shrimp farmer profits are likely to decline in the context of a challenging end of year, impacted by slower demand, price corrections, and ongoing high production costs.  

In the report, RaboResearch Food & Agribusiness mentioned that recessionary dynamics have already started in both the European Union and the United States. Meanwhile, China has the potential to be a key driver of demand for shrimp, and possibly salmon in Q4 2022 depending on how COVID-19-related lockdowns and import restrictions evolve. 

Feedinfo spoke to the report’s lead author, seafood analyst, Gorjan Nikolik to find out more about what’s ahead for the salmon and shrimp sectors and to take a look at the evolution of the markets - recovering from the aftermath of COVID-19 - in the past year. 

When Feedinfo last interviewed Nikolik in August 2021 (https://www.feedinfo.com/our-content/insight-aquaculture-and-aqua-feed-sectors-boosted-by-seafood-demand-recovery/248742), the global salmon and shrimp supply chains had experienced a gradual recovery from the early COVID-19 days. Shrimp was increasing supplies; salmon was targeting to do so in 2022.  

Summer 2021 to Russian Invasion of Ukraine 

Looking back at these markets in the August 2021 to February 2022 period, Nikolik said salmon and shrimp experienced unprecedented demand in H2 2021 and for the most part of H1 2022. This was due to more foodservice operations re-opening after pandemic-related measures started loosening, while the increased demand at retail level was also being maintained.  

For Nikolik, the supply response was different between the two species.  

“Shrimp has an elastic supply curve, and the good prices encourage supply growth. We estimate that supply growth for marine farmed vannamei was around 17-18% for FY 2021 and with more strong growth in H1,” he said.  

“In the case of salmon, the supply dynamics were not price related. In 2021, salmon had relatively strong supply growth due to exceptionally good growth conditions in Norway (+11.7%) as well as increasing use of large smolt. This supply growth turned negative in H1 2022 as Norway, Chile and most other large producers had weaker production. In all cases, this is supply side related,” he added. “The consequence is that in the case of salmon, we experienced record breaking price levels in H1 2022.” 

Since the Ukraine War  

We asked how these two species have fared since late-February, when the war in Ukraine broke out, to see if there were any direct or indirect implications.  

According to the seafood analyst, the effect of the Ukraine war on the aqua sector is primarily felt on feed commodity prices, as can be expected. He pointed out, however, that fishmeal and fish oil, which are not directly impacted by the war, are indirectly supported by the high price levels seen from other commodity ingredients.  

“Combining the rise in commodity prices which had already started in 2020, salmon feed costs per kilogramme of salmon produced have increased by approximately 13% in H1 2022 relative to 2019,” he commented. “In the case of shrimp, probably a similar price increase has occurred in Ecuador. But it is hard to say what the effect is in Asia as shrimp feed cost prices are slower to be passed into feed prices [in that region].”  

Nikolik stressed, however, that Ukraine by itself is not large enough to impact the aquaculture market. “But it adds to the bad weather, strong demand and low inventories to further support commodity prices,” he said.    


For the rest of 2022, RaboResearch Food & Agribusiness expects a cooling of the seafood market as consumers exhibit recessionary behaviour.  

“Less foodservice demand means less demand for seafood,” Nikolik explained. “In the case of salmon, this combines with the seasonal price decline we have in the summer. Still, compared to last year, prices will remain elevated.”  

“For shrimp, the situation is again somewhat different,” he added. “Due to strong supply, prices in H1 2022 had already started to contract to the point where they are now below 2019’s levels. If the supply growth continues, we may see below-cost prices for shrimp for a temporary period in H2 2022.”  

Despite the expected challenging period in the short-term for the shrimp industry, Nikolik said RaboResearch Food & Agribusiness remains optimistic for the medium and long-term. 

Aquafeed Ingredients 

In the August 2021 interview with Nikolik, we looked at the dynamics of one of the aquaculture market’s key feed ingredients: fishmeal. At the time, the seafood analyst argued that fishmeal was a relatively stable factor when it comes to the ingredients aqua feed companies have been buying in the last two or three years. Prices were steady.  

A year later, his view is the same. “[Despite some local supply volatility] supply has been stable, changing only slightly in 2020 and 2021 vs 2019 ... Prices have increased somewhat but not as much as other commodities, making fishmeal currently competitive in the feed formula.” 

The record-high prices of vegetable substitutes make marine ingredients relatively competitive, supporting demand and prices. 

Fish oil prices, however, have skyrocketed. Looking at IFFO data, the Peruvian origin fish oil FOB price has risen from approximately $2,000/tonne in the summer of 2021 to over $3,600/tonne today.  

For Nikolik, the case of the fish oil market is different with much less elastic demand, meaning that the buyers have limited alternatives.  

“[The limited number of alternatives] combined with skyrocketing vegetable oils, for which the war in Ukraine has an even larger relevance due to its leadership position as a sunflower oil exporter, has created more competition for fish oil,” he said. “And even a slight increase in demand for fish oil can lead to rapidly increasing prices.”