Unexpected price lurch raises price expectations
In just four weeks, the salmon price has grown by a third. A month ago, the price seen by salmon producers floated just above NOK 50 (EUR 5.2).
On Friday, salmon was sold on the upper end of 60 (EUR 6) after a fourth straight week of rising prices. March prices are now at a par with the peak seen over the past two years, and there’ still two and half weeks to peak demand at Easter.
With spot prices shooting up, contract and forward prices have robotically followed suit. Exporters SalmonBusiness spoke to on Monday said yearly contracts can now be set at between NOK 57 and 58 (EUR 5.9 and 6) a kilogram (fresh-onboard in Oslo).
At the same time, a willingness to agree firm-price contracts is palpable, at least among growers.
“It’s in place, but many believe that because the price is so high for the moment, that it’ll slide down in not too long. We won’t see anymore contracts based on the NOK 57.50 (EUR 5.9) contracts. Through the year at the NOK 56 (EUR 5.8) mark looks like the right level, but there are no sellers there,” an exporter said.
That level is reflected n FishPool’s forward prices which normally work in tandem with contract prices. The latest transactions reveal that financial salmon contracts for third quarter and fourth quarter 2018 can be set at NOK 55.09 a kilo (EUR 5.7/kg): 2019 contracts are being traded now at NOK 56.10 (EUR 5.8)
The fulsome spike in spot prices has come as a big surprise for a majority of market players. That’s also seen in the jump in FishPool’s April contracts, which have grown by NOK 6 a kilo (EUR 0.6) in a month.
The main reason for the rise in prices is a combination of unexpectedly high demand, especially driven by overseas markets and low feed use due to cold, late winter in the North Atlantic.
“As long as the thermometer shows minus-15 to 20 and the harvest is as it’s been it isn’t very surprising. Had you asked me a month-and-a-half ago, I would have said, “Never in the world”,” an exporter told SalmonBusiness on Friday.