Peruvian Squid Prices Hit A Record Low For The Year

Entering November, sentiment in the squid market has become noticeably cautious. In recent days, the most frequently used words in exchanges between raw material suppliers and traders are "price drop," "chaos," and "difficult to predict," with Peruvian squid prices hitting a new low for the year.

This round of decline is not caused by a single factor, but rather by the combined effect of several pressure points accumulated in the previous period: on one hand, the fishing structure in Peruvian waters is still dominated by large-scale fishing, and on the other hand, the inventory pressure in domestic cold storage has not been released smoothly. The supply and demand have not found a balance, so it is naturally difficult to stabilize prices.

Peruvian seafood tends to be large-sized, leading to tight inventory at processing plants but slow market absorption.

From the perspective of the local situation in Peru, it's true that "the supply is actually limited." Several Peruvian exporters reported to Chinese buyers after the Qingdao Fisheries Expo that most factories have run out of raw materials to process and can only slowly sell off their remaining large-sized inventory. Apart from occasionally hearing about quotes for 2-4kg cut-up fish, other sizes are almost completely sold out.

However, the domestic market focuses on the pace of consumption, not on the availability of fish from Peru. This year, large-sized fish have suddenly flooded the market, while domestic processing companies prefer smaller and medium-sized fish. This mismatch in size cannot be solved simply by factories increasing production. With inventory piling up, the price of large-sized fish is inevitably under pressure.

The shift of the ocean-going fleet to smaller fish has not provided positive support for prices.

Meanwhile, the domestic ocean-going fleet has been gradually shifting from Peruvian waters to the equatorial region over the past two weeks. The fish size after the shift is significantly smaller, with fishing vessels reporting daily catches of only a few tons, mainly medium-sized and smaller fish.

Logically, smaller sizes should always be in high demand, but the problem lies in the insufficient volume to drive the overall market. Furthermore, the fluctuating production of fishing vessels discourages traders from stockpiling in advance, preventing these smaller sizes from providing stable support for overall prices.

The divergence in sentiment between buyers and sellers widened further after the Qingdao Fisheries Expo.

During the Qingdao Fisheries Expo, many Peruvian exporters offered significant discounts to secure orders. While these were good prices for buyers, domestic traders' demand did not keep pace. Most companies were cautious about the market outlook, with discussions primarily focused on "wait and see" and "digesting existing inventory first."

The more cautious market sentiment, the harder it is to stabilize prices. Even though some specifications have reached their lowest points for the year, buyers have not shown a strong willingness to replenish their inventories, resulting in a cycle of "prices falling-inventory remaining unchanged-prices continuing to fall."

The stable prices of frozen and cooked products indicate that the end market has not fully entered the off-season.

Frozen product prices in Shidao have remained stable for the past two weeks, with no fluctuations in prices for items such as squid ear strips, squid flowers, and squid skewers. The cooked product market in Longkou has also not seen any downward adjustments, with little change in the price range for squid tail strips, tail slices, and squid strips.

This indicates that the end-user market is not entirely entering a slow season, but rather that the price pressure is due to an imbalance between supply and demand on the raw material side. In other words, the current "slump" is more of a structural problem than a consumption problem.

The market will remain under pressure for some time, but the downside may be limited.

Looking at the current supply and demand situation, Peruvian waters are currently under research patrols, so supply will not increase in the short term; the output of the ocean-going fleet is unlikely to expand significantly; and the replenishment pace of domestic processing is not strong enough. These factors combined mean that while prices are weak, there is limited room for further sharp declines.

However, two signals are needed for a significant rebound:

Cold storage inventory begins to be significantly depleted;

The product mix returns to normal, shifting towards smaller and medium-sized sizes.

Only when these two conditions are met will the market have a chance to shift from a "passive decline" to "natural stabilization."