Chilean salmon industry might face further losses in the upcoming months

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Senior analyst in seafood Gorjan Nikolik, Rabobank, fears the COVID-19 will knock the salmon prices further down. Especially the price on Chilean salmon is more at risk than usual. 

“The losses will hit sooner in Chile than in Norway, where they might make some losses on a per kilo basis for a few weeks.

I think it will be the Chileans more than the Norwegians, that will freeze their products as a result of the decline in price,” said Gorjan Nikolik to SalmonBusiness.

The European summer is typically a time of year, where the salmon prices more unstable. They are high in the beginning of the season and then drop at the end of summer and fall.

The senior analyst explained that especially Chilean salmon farmers will be hit. Because they will very likely freeze down bigger amounts of salmon for better times, than the Norwegian farmers will.

In the summer of 2019 the price on 4-5 kilo salmon dropped down to NOK 45-46 (EUR 4.6 – 4.7).

Closed borders
With an upcoming summer, where many borders are still closed to foreign tourists, the seafood analyst dreads, how this will be reflected in the salmon prices.

“We are now heading towards a period where the salmon farmers might make some losses,” the analyst explained.

Most fresh Chilean salmon goes to Brazil and the US, where all hotels and restaurants are still closed or challenged by the COVID-19. Chile’s export markets for frozen salmon are Japan, China, Europe and Russia.

Read also: Chile’s frozen salmon inventory swells to over 50,000 tonnes

Norwegian salmon is mostly sold fresh. The salmon farmers export 80 per cent of their products to Europe.

With these facts in mind Gorjan Nikolik estimates, the Norwegian salmon farmers will not be as influenced as the Chilean.

“The Norwegian farmers will most likely just absorb the price, and then make some losses if the price continues to come down,” said the analyst.

Waiting is not without a risk
Gorjan Nikolik stated that it is questionable how much Chilean salmon, can be moved to frozen stock, because the cost is high on freezing products down.

Standing by and waiting the salmon price to be boosted is risky for the farmers.

“It costs lots of money to freeze. The good thing is, that the Chileans have more markets for frozen products,” he said and added:

“Chile has a number of big regions for them that are pretty much frozen. I believe they have frozen products many times before in the past,” he told.

But in regards to the upcoming European summer, Gorjan Nikolik considered it a big risk, that the industry will be slammed.

“In Europe right now, we have not yet reached a point, where we are below costs. But we might very well reach below costs during the summer. It could happen if we follow the typical summer pricing pattern,” he concluded.