Rabobank Group - Global Aquaculture Alliance

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Trade dynamics in key aquaculture industries

Rabo Research Food & AgribusinessGorjan Nikolik, October 2019

Rabobank Group

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Toronto

New York

Mexico City

Sao Paulo

Buenos Aires SydneySantiago de Chile

Willemstad

Calgary

Washington DC

Chicago

AtlantaDallas

El Centro

San Francisco

Tasmania

Melbourne

Wellington

Cedar Falls

St Louis London

Madrid

Milan

AntwerpFrankfurt

Warsaw

Utrecht

Hong Kong

Singapore

Mumbai

Kolkata

Jakarta

Tokyo

Beijing

Delhi

Kuala Lumpur

Moscow

Istanbul

Dublin

Lubuan

Amsterdam

Paris

Bangalore

Shanghai

MaputoChimoio

Beira

Tete

Ulónguè

Malema

Maxixe

Nampula

Kigali

Asuncion

46 Countries Over 600 Offices Over 50,000 Employees

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Seafood, the most traded protein globally

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Salmon

Shrimp Tilapia – Pangasius

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Salmonids: high profitability attracts alternative supply

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Salmonid trade in 2012

2012

Source: UN Comtrade, Rabobank, 2019Note*: Russia exports are inclusive of Belarus

Norway à EU (#1)

656,861 tonnes $3,290.2 Million

Chile à Japan (#2)


Chile à USA (#5)

93,160 tonnes $675.4 Million

Norway à USA (#7)


Chile à Russia* (#6)


Canada à USA(#4)


Norway à Russia*(#3)


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Salmon trade in 2018, relatively few changes so far, the sector is maturing

Source: UN Comtrade, Rabobank, 2019Note*: Russia exports are inclusive of Belarus

Chile à Japan (#3)


Chile à USA (#2)


Canada à USA(#4)


Chile à Russia* (#5)


Norway à EU (#1)


Norway à Russia*(#7)


2018

Norway à USA (#6)


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Value growth in times of limited supply

Global salmon imports in volume (left axis) and value (right axis)

Source: ITC, Rabobank, 2019

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

20132014

20152016

20172018

Million USD

Thou

sand

s

tonnes

USA EU28 China Japan Russia+Belarus Brazil South Korea Rest of the World Total Value

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Most growth is out side of Europe, the most mature salmon market

Top importers of Salmon, (Difference of 12 months, 07/18-06/19 to 07/17-06/18)


Importer Country Value (USD Million) Change Volume (tonnes) Change

EU28 15,527 -0.6% 1,881,391 3.7%

US 4,845 9.4% 432,080 7.6%

Japan 2,268 8.6% 261,123 8.5%

China 1,374 14.2% 308,480 30.3%

Brazil 594 4.8% 90,949 6.1%

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Salmon RAS: many projects, only few will be realized, but those that succeed will be in regions physically far from traditional suppliers

Sources: Rabobank 2019

7.000 mtCanada

Iceland

Norway

Rest of Europe

Russia

Africa

Middle East310.000 mt

US

2.500 mt

26.600 mt

9.500 mt

165.000 mt

15.000 mt

38.500 mtJapan

China137.000 mt

11.500 mt

6

6

3

13

11

1

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2

3

Number of announced RAS salmon projects increasing from 30 to over 50 from 2018 to 2019

0

7,500

15,000

22,500

30,000

-

200,000

400,000

600,000

800,000

Publ

icly

anno

unce

dpr

ojec

ts in

2018

(LH

S)

Publ

icly

anno

unce

dpr

ojec

ts in

2019

(LH

S)

Curr

ent

prod

uctio

nin

201

9(R

HS)

met

ric to

ns

met

ric to

ns

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Salmon: enjoying excellent demand, but high prices will create a supply response sooner or later

Despite recent slow down Norway followed by Chile will be 80% of volume growth. Watch

for the post-smolt strategy and a possible

harvest weight recovery in Norway

Salmon demand is growing in both developed and

developing nations, despite high prices

Product innovation and marketing in

salmon have been an example to the

seafood industry. How will the existence of

RAS change marketing communication?

Technology: global trade can be impacted

by RAS and by offshore supply

especially in the US, China and Japan

New supplier regions coming up in the

future: Iceland and Russia, both can

potentially have 100k industries

Salmon

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Shrimp: growth in a low price period

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Global marine shrimp aquaculture: EMS induced contraction and recovery

Source: Rabobank, FAO 2019*Chinese production includes freshwater Vannamei farming . M. Rosenbergii is not included. After 2011 we make significant corrections to FAO data based on industry sources

Global Shrimp aquaculture (marine species) 2008 – 2018

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

000’ tonnes

China Indonesia Vietnam Thailand IndiaEcuador Mexico Bangladesh Malaysia BrazilCentral America Peru Colombia/Venezuela Phillipines Others

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Shrimp trade in 2012, pre peak EMS

2012

Source: UN Comtrade, Rabobank, 2019Note*: It includes exports to China and Vietnam

India à USA(#2)


Ecuador à EU (#3)

86,245 tonnes $492.7 million

Thailand à USA(#1)


Ecuador àChina*(#6)


India à EU(#5)

70,495 tonnes $445.8 millionIndonesia à USA(#4)


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Shrimps trade in 2018, major new trade flows emerge originating from Ecuador and India

2018

Source: UN Comtrade, Rabobank, 2019Note*:It includes exports to China and Vietnam

India à USA(#2)

248,160 tonnes $2,182.7 million

Thailand à USA(#7)


Indonesia à USA(#4)


Ecuador àChina*(#1)


Ecuador à EU (#5)


India à EU(#6)


India àChina(#3)

179,914 tonnes

$1,095.0million

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Based on US shrimp imports a clear picture emerges of India substituting Thailand and driving growth

US shrimp imports in volume (left axis) and value (right axis)

-

2,000

4,000

6,000

8,000

-

200

400

600

800

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million USD‘000 tonnes

India Thailand Vietnam Indonesia Ecuador Mexico China Others Value

Source: UN Comtrade, Rabobank, 2019

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While China is the main demand driver, emerging as the new largest shrimp importer

Global marine shrimp imports in volume (left axis) and value (right axis)

10000

12000

14000

16000

18000

20000

22000

24000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2013 2014 2015 2016 2017 2018

Value in Million USD

Mill

ions

tonnes

USA EU China+Vietnam* Japan Rest of the World Total Value

8%

28%

33%

25%

Source: UN Comtrade, Rabobank, 2019Note: *We have used exports to China+Vietnam from World

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Two growth markets US and China and two in decline EU and Japan contributing to the low prices we are experiencing

Top importers of Shrimps, (Difference of 12 months, 07/18-06/19 to 07/17-06/18)


EU28 6,664 -13.4% 794,198 -6.2%

US 6,153 -9.7% 696,915 2.1%

China 2,880 142.3% 443,944 169.2%

Japan 2,311 -8.4% 220,691 -4.2%

Vietnam 1,107 -63.2% 184,192 -59.5%

China + Vietnam 3,988 -4.9% 628,137 1.4%


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-

1,000

2,000

3,000

4,000

5,000

6,000

-

100

200

300

400

500

600

700

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million USD‘000 tonnes

USA EU28 China & Vietnam Japan Others Value

Exports dominated by EU and Japan

Exports dominated by China and US


Indian Shrimp Exports

Consequently India, once reliant on the EU and Japan is now fully focused on US and China

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Top exporters of Shrimp, (Difference of 12 months, 07/18-06/19 to 07/17-06/18)

Exporter Country Value (USD Million) Change Volume (tonnes) Change

Ecuador4 2,094 12.1% 364,011 38.4%

India4 2,491 -7.9% 348,650 -3.4%

Indonesia3 756 -9.8% 91,174 -0.2%

China4 929 -19.9% 84,102 -18.3%

Thailand4 738 -6.1% 72,028 -3.5%

Vietnam3 1,440 -11.9% NA NA

Note: 3:January-June 2019; 4: January-July 2019Source: STIP, Trade Map GACC, VASEP, CAN, BPS, 2019

But interesting to see the difference in trade performance between Ecuador and the Asia shrimp exporters in recent months

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If price is the only factor explaining supply changes this could suggest a difference in cost, but there are other factors also

Shrimp prices: Left axis US import prices, right axis Thai export prices

Asian Shrimp supply in 2019 Ecuador

Shrimp supply in

2019Down c.5 to 10%?

Up 15-20%?

100

140

180

220

260

300

2

3

4

5

6

7

jan-09 jan-10 jan-11 jan-12 jan-13 jan-14 jan-15 jan-16 jan-17 jan-18 jan-19

THB/

kg

USD

/lb

Urner Barry HLSO Farm – Raised White Shrimp Index

Monthly Thai White Shrimp (Vannamei), wholesale prices, sized 60pc/kg in THB

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Shrimp: still supply growth despite lower prices, but not everyone seems to be impacted equally

Growth continuing despite price crash

Supply momentum surprisingly strong

Intensification, technology and

professionalization are the key drivers. And still some new land entering the sector

China is the big unknown

Domestic supply, exchange rate, domestic

economy are variables that can change the net

trade

Currently Ecuador / LAM seem to operate in a market only partially related to that of India

and the Asia producers. Meaning a price

recovery for the Asian producers is more likely

India to contract (temporarily in 2019), Ecuador still showinggrowth , while other Asian produces are somewhat stable

SalmonShrimp

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Fresh water white fish: China to soon become a net importer?

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Back in 2015 China and Vietnam were the exporters and the US and EU the importers, a situation not changed since the 1990s

2015


Vietnam à USA (#3)


China à USA (#1)


Vietnam à Brazil (#6)


China àAfrica (#4)


Vietnam à M. East(#5)


Vietnam à EU28 (#2)


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But by 2018 Chine is emerging as a new and unexpected designation while the EU is loosing relevance

2018

Note:*Vietnam to China trade flow is for 2017Source: UN Comtrade, Rabobank, 2019

Vietnam à USA (#2)


China à USA (#1)


Vietnam à EU28 (#3)


Vietnam* àChina (#4)


Vietnam à Brazil (#5)


China à EU28 (#6)


26Source: UN Comtrade, Rabobank, 2019

EU pangasius imports and prices

In EU the booming fresh water fillet market has come … and gone

0

1

2

3

4

5

0

50,000

100,000

150,000

200,000

250,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

EUR/Kilotonnes product weight

27Source: GOAL 2017, FAO 1990-2014, Miscellaneous sources 2015-2019, Rabobank 2018Note: NMFS: Prices US import frozen fillet Prices are annual averages, except for 2017 (January-July average), Global Aquaculture Alliance 2017

US imports of Tilapia and Pangaisus

Now there is seems to be a declining trend in the US imports ..

0

40

80

120

160

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Million lbs.

Tilapia Frozen Fillets Pangasius Frozen Fillets Tilapia Frozen Whole Fish Tilapia Fresh Fillets

Tilapia Frozen Fillets

Pangasius Frozen Fillets

28Source: UN Comtrade, Rabobank, 2019

Global fresh water white fish (pangasius and tilapia) imports in volume (left axis) and value (right axis)

-

900

1,800

2,700

3,600

0

300,000

600,000

900,000

1,200,000

2012 2013 2014 2015 2016 2017 2018

Value in Million USD

Mill

ions

tonnes

USA EU ChinaAfrica Latin America Middle EastAsia Ex China&Middle East Rest of the World Total Value

9.5%23.7%

9.6%

Fresh water white fish trade is stable, but China is emerging as a new market compensating for the decline in the EU and US

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Top importers of Fresh water fish, (Difference of 12 months, 07/18-06/19 to 07/17-06/18)



US 1,288 17.5% 296,960 9.9%

EU28 458 8.6% 136,274 0.9%

China 353 62.1% 139,968 55.0%

Top exporters of Fresh water fish, (Difference of 12 months, 07/18-06/19 to 07/17-06/18)

Exporter Country Value (USD Million) Change Volume (tonnes) Change

Vietnam 1,694 23.2% 565,485 5.7%

China 668 -9.2% 245,495 -8.1%

China’s net export of fresh water fish is rapidly declining due to tariffs on exports in the US and success of Vietnamese pangasius in China

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The ASF outbreak can be a further driver of fresh water fish imports into China and re-focus of the tilapia industry domestically

Unprecedented decline forecast in Chinese pork productionHerd decline drives production losses

Source: China Statistics Yearbook, Rabobank, 2019

0

10

20

30

40

50

0

100

200

300

400

500

2018 2019f 2020f

million headMillion head

Total herd (LHS) High case Sows (RHS)

20

30

40

50

60

2018 2019f 2020f

Million metric tons

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Retail prices of all proteins are rising, in response to pork

Source: Chinese Ministry of Agriculture and Rural Affairs, Boyar, Rabobank 2019

ASF is pressuring pork prices up

Pork prices are increasing, impacting all proteins and eventually seafood prices. Tilapia and Pangasius are species that could benefit

0

15

30

45

60

Dec

-13

Apr

-14

Aug

-14

Dec

-14

Apr

-15

Aug

-15

Dec

-15

Apr

-16

Aug

-16

Dec

-16

Apr

-17

Aug

-17

Dec

-17

Apr

-18

Aug

-18

Dec

-18

Apr

-19

Aug

-19

RMB/kg

Piglet Live hog Pork

0

20

40

60

80

Jan-

14

May

-14

Sept

-14

Jan-

15

May

-15

Sept

-15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

Jan-

18

May

-18

Sep-

18

Jan-

19

May

-19

CNY/kg

Pork Beef Sheepmeat Chicken

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Fresh water white fish

Fresh water white fish: US-China trade war and ASF can convert China for a leading exporter to a net importer

Profit pool has contracted due to falling exports of fillets and lower

price to EU and US

US-China trade war will create more trade shifts and

changes in profitability globally

New target markets are developing

counties, Brazil, China, Indonesia,

Egypt, Sub Saharan Africa, India

Both production and trade show large

markets emerging in developing countries

Will a major newcomer emerge to challenge China and Vietnam? Barrier to

entry is relatively low.

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Gorjan NikolikSenior Analyst – Seafood

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