Two converging forces are reshaping the global squid market in 2026: a significant surge in Peruvian fishmeal prices driven by El Niño, and the direct impact of warming waters on squid fisheries worldwide. For importers and distributors of frozen squid, understanding this interplay is critical for making informed sourcing decisions through Q3-Q4 2026 and into 2027.
This analysis examines the fishmeal price shock, its transmission mechanisms to the squid market, current supply conditions across major origins, and our price outlook for the coming quarters.
1. The Peruvian Fishmeal Price Shock
Peru is the world's largest fishmeal producer, accounting for roughly 25-30% of global supply. The 2026 situation is alarming:
Anchoveta Biomass Decline
El Niño has pushed warm water into Peru's coastal upwelling zone, reducing the anchoveta (Engraulis ringens) biomass — the raw material for approximately 70% of global fishmeal. IMARPE surveys indicate the biomass is down 20-30% from 2025 levels, with warm water intrusions concentrated in the northern and central coastal zones where the densest anchoveta schools normally form.
First Season Quota Slashed
Peru's 2026 first fishing season (April-July) anchoveta quota was set at only 1.4 million MT — down 35% from the 2025 first season quota of 2.16 million MT. Actual landings came in even lower at approximately 1.1 million MT, as concentrated warm water pockets made the remaining biomass difficult to locate and harvest efficiently.
Fishmeal Prices Surge
| Grade | Q4 2025 | Q2 2026 | Change |
|---|---|---|---|
| Super Prime | $1,550/MT | $1,950-2,100/MT | +26% to +35% |
| FAQ / Standard | $1,350/MT | $1,700-1,850/MT | +26% to +37% |
The second fishing season (November 2026) outlook is uncertain. If El Niño conditions persist through the austral spring, the quota could be further reduced, potentially pushing Super Prime fishmeal above $2,200/MT — a level not seen since the 2015-16 El Niño.
2. The Fishmeal–Squid Connection: Why It Matters
The link between fishmeal and squid markets is not obvious to all participants, but it operates through three powerful transmission channels:
2.1 Feed Substitution Effect
When fishmeal prices spike, aquaculture feed manufacturers actively seek alternatives. Squid meal — produced from squid processing waste (heads, tentacles, offcuts) — is one of the highest-quality fishmeal substitutes available, with:
- Protein content: 55-65% (comparable to fishmeal's 64-72%)
- Amino acid profile: Favorable for shrimp and finfish feed formulations
- Palatability: Squid meal is highly attractive to farmed fish, often outperforming plant-based alternatives
With fishmeal at $1,950+/MT, squid meal becomes economically attractive at prices up to $1,600-1,800/MT. Chinese squid processors are responding to this demand signal by diverting more processing waste to meal production, reducing the availability of squid trimmings for other value-added products.
2.2 Fishing Effort Redirection
In Peru and Chile, the economics of fishing shift during a fishmeal supply crunch:
- Vessels that would normally target squid (Dosidicus gigas — jumbo flying squid) are redirected toward anchoveta when quotas allow, as the per-ton revenue for reduction to fishmeal has risen sharply.
- When the anchoveta season is closed, vessels sit idle rather than targeting squid, as the fuel costs of squid fishing (longer trips, deeper sets) are harder to justify when fishmeal revenues are expected to resume.
- Peruvian jumbo squid landings in 2026 are estimated down 10-15% from 2025.
- Chilean squid catches have also declined, with fleet operators reporting unusual warm-water-driven migration of jumbo squid into deeper, less accessible waters.
2.3 El Niño's Direct Impact on Squid
El Niño affects squid populations independently of fishmeal dynamics:
- Jumbo flying squid (Dosidicus gigas) migrates southward and into deeper waters during warm events, reducing catchability for the artisanal fleet that uses small-scale handline and jig gear.
- Argentine shortfin squid (Illex argentinus) — the Falkland Islands fishery saw a mediocre 2026 season, with total catch down approximately 12%. The Chinese distant-water fleet's returns from the Southwest Atlantic have been below average.
- Pacific flying squid (Todarodes pacificus) — South Korean and Japanese catches are under pressure from warm water intrusions into the Sea of Japan and East China Sea.
The combined effect of these three channels means the squid market is being squeezed from both sides: supply is shrinking while feed-industry demand for squid meal is growing. This is a recipe for sustained price pressure.
3. Global Squid Market: Current Snapshot
A. Chinese-Origin Squid (Illex argentinus / Todarodes pacificus)
Supply is tight. Processing plants in Zhoushan, Qingdao, and Dalian are operating at only 60-70% capacity. Distant-water fleet returns have been below average, and the domestic market is competing aggressively for available raw material.
| Product | FOB Ningbo (Q3 2026) | vs. Q4 2025 |
|---|---|---|
| Whole Round 100-200g | $1,600-1,800/MT | +15% |
| Whole Round 200-400g | $1,900-2,200/MT | +18% |
| Tube / Cleaned | $2,400-2,800/MT | +20% |
| Squid Flower / Cut | $2,800-3,200/MT | +20% |
Premium sizes and value-added products (tube, flower) are seeing the steepest increases, reflecting both raw material scarcity and strong demand from European and Northeast Asian markets.
B. Peruvian Jumbo Squid (Dosidicus gigas)
Supply is moderately tight. Artisanal catches have slowed, but the industrial fleet is still operating. Export volumes to China (for re-processing) are down approximately 15%.
- FOB Callao: USD 1,200-1,400/MT (up 12-18% from 2025)
- Some Peruvian processors are holding inventory, betting on further price increases as the fishing season slows — a rational strategy given the fishmeal price environment.
C. Indian Ocean Squid (Uroteuthis duvaucelii / Loligo)
Supply is relatively stable. Indian Ocean conditions are less affected by this particular El Niño event, as the Indian Ocean Dipole (IOD) has been in a near-neutral state. Prices have seen modest increases of 5-8%, but quality and size consistency remain variable — this origin is best suited for price-sensitive markets where consistency is secondary to cost.
4. Regional Demand Drivers
Europe (Spain, Italy, Greece)
Strong demand for cleaned tubes and rings. European buyers are accepting higher prices but negotiating hard on glazing specifications. Spanish importers are increasingly sourcing from Falkland Islands and UK-flagged vessels as Chinese supply tightens, though at premium pricing.
Japan & South Korea
Japanese surimi production is competing for squid raw material, adding upward price pressure on smaller-sized whole round product. Korean domestic consumption of grilled and dried squid preparations remains strong.
Southeast Asia (Thailand, Vietnam, Philippines)
Growing foodservice demand continues. Thai processors are actively seeking Chinese-origin squid for re-processing and re-export. Price sensitivity is moderate — quality and consistency are prioritized over the lowest possible cost.
Middle East
Steady demand for whole round squid. This is a relatively price-inelastic market segment; buyers are absorbing cost increases rather than reducing volumes.
China Domestic Market
Domestic consumption of squid snacks, dried squid strips, and prepared dishes is robust. Chinese processors are effectively competing between export and domestic channels — and domestic prices are currently offering better margins than some export markets, reducing export availability.
5. Price Outlook: Q3 2026 – Q2 2027
| Product | Q3 2026 | Q4 2026 | Q1 2027 | Q2 2027 |
|---|---|---|---|---|
| Chinese Whole Round 200-400g | $1,900-2,200 (peak) | $1,850-1,950 | $1,700-1,800 | $1,550-1,700 |
| Chinese Tube/Cleaned | $2,400-2,800 (peak) | $2,400-2,600 | $2,200-2,400 | $2,000-2,200 |
| Peruvian Jumbo (Callao) | $1,200-1,400 (peak) | $1,300-1,400 | $1,200-1,300 | $1,150-1,250 |
Key assumptions behind this outlook:
- El Niño conditions begin weakening in Q4 2026, with ENSO-neutral conditions developing by Q1 2027
- Peru's second anchoveta season (November) produces a reduced but viable quota of 1.0-1.5 million MT
- Chinese distant-water squid fleet improves catches in Q1 2027 as ocean temperatures normalize
- Fishmeal prices plateau in Q4 2026, reducing substitution pressure on squid by early 2027
- No major regulatory changes (e.g., new fishing moratorium extensions, trade restrictions)
6. Strategic Recommendations for Importers
Sourcing Strategy
- Secure Q4 supply now: Prices are still climbing. Locking in orders for October-December delivery at current levels provides a hedge against further increases. Chinese exporters with good raw material access are accepting forward orders.
- Diversify origins: Don't rely solely on Chinese Illex or Todarodes. Peruvian jumbo squid and Indian Ocean loligo each have different supply dynamics and can provide partial coverage when one origin is tight.
- Consider size flexibility: Accepting 100-200g alongside 200-400g gives your supplier more options to fill containers and can reduce average cost per MT by 10-15%.
- Build supplier relationships: In tight markets, established buyers with track records get priority allocation. Work with exporters who have multi-year histories and HACCP/BRC certifications.
Pricing Strategy
- Absorb selectively: Rather than passing all cost increases to customers, consider partial absorption on high-volume items while protecting margins on premium sizes and value-added products.
- Introduce tiered pricing: Offer customers a choice between premium larger sizes at higher prices and standard/smaller sizes at more stable rates.
- Plan for Q1 2027 relief: Historical patterns suggest prices will ease 6-12 months after the El Niño peak. Structure contracts to reflect this expected normalization.
Quality Assurance
In tight supply environments, quality shortcuts become more common. Extra vigilance is essential:
- Request pre-loading inspection reports with detailed glazing measurements and size grade verification.
- Specify glazing requirements carefully — in a rising market, excessive glazing (water weight) is the most common way to inflate apparent volume.
- Verify species and origin labeling — when Chinese Illex is scarce, some suppliers may substitute or blend with other species.
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Get Current Squid Prices →Conclusion
The 2026 squid market is being shaped by a powerful combination of forces: El Niño is reducing catches across all major origins, while the Peruvian fishmeal price surge is creating substitution demand that competes with food-grade squid for raw material. The result is a market where supply is tightening, prices are rising, and the outlook calls for continued pressure through Q3-Q4 2026.
However, this is a known, cyclical pattern. El Niño events have a beginning and an end. The importers who navigate this cycle most successfully are those who act early — securing supply, diversifying origins, and maintaining the supplier relationships that will deliver long after this particular event has faded.
At Poseidon, our 18 years in the frozen squid trade means we've seen every market cycle. Our processing facilities in Ningbo, strong fleet relationships, and rigorous quality control give us the flexibility to serve our customers even when supply is tight. If you're looking for a reliable squid partner through this cycle, let's talk.