Fishmeal price behaviour: Global dynamics and short-term changes

About 80% of the world's pelagic fish resources are processed into fishmeal. The price of fishmeal is set on the world market and imposed to local producers. The high variability of fishmeal prices on the world market is not wholly connected with the fluctuations of aggregate supply and demand; interdependencies with other markets and speculative activities determine a large amount of this variability. This study considers the relationship between the fishmeal and soyabean meal markets. The hypothesis tested here concerns the existence of a long-term relationship directing the behaviour of the prices of these two commodities. Tests for cointegration are performed, and an equilibrium relationship is estimated. The results show that soyabean meal market induces shortterm fluctuations into the fishmeal market because of speculative effects, while fishmeal price changes influence soyabean meal prices through a modification of the demand for soyabean meal.