The second half of 2023 could be the most challenging period for global aquaculture since the peak of the pandemic in 2020, according to Rabobank's H2 outlook. The report suggests that low prices for shrimp, combined with a reduction in the availability of fishmeal due to an El Niño-related slump, will make margins extremely tight across the aquaculture value chain. Shrimp farmers are likely to be hit the hardest, with demand in the US and Europe dropping sharply, and suppliers in China stuck with stockpiled inventory.

Rabobank predicts that prices will fall even lower, with further drops in demand from China and continued growth in Ecuador's production. The Asian shrimp sector could be facing its most challenging period since the initial outbreak of early mortality syndrome (EMS) in 2011. In Asia, virtually the entire industry is operating at a loss per kilogram sold, and producers are heavily reducing their investments in broodstock and post-larvae.

The continued growth of Ecuadorian production is compounding the softening of farmgate prices for shrimp across the world. However, there is a possibility that things might improve by 2024. Meanwhile, the outlook for the salmon sector is more optimistic, with Norway's salmon sector experiencing one of the most profitable periods in its history. The advent of a strong El Niño has created concern about the shortage of fishmeal, with this year's supply down by over 500,000 tonnes.

El Niño's impact on aquafeed supplies in the coming year or two is speculative, but it could have some benefits in terms of production of other key feed commodities. Soy prices are falling, and Brazil is due to have a record crop. However, some species and regions will be hit harder than others, depending on whether suppliers can formulate feeds with lower fishmeal content. El Niño may also increase the risk of flooding in Ecuador and algal blooms in Chile, adding to the difficulty of the year.