New biomass hike indicates increased salmon growth, even in 2021

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Good growth conditions in the sea providing a rising supply side.

Norway’s Directorate of Fisheries published statistics for November on Thursday showing an increase in the salmon biomass in the country’s fjords of 11.1 per-cent on an annual basis, up 1.8 per-cent from the previous month.

“The 2020 generation, in particular, is experiencing strong growth, with a 19.9 per-cent increase in biomass compared to the 2019 generation at the same time last year,” investment bank Carnegie’s seafood analyst Lars Konrad Johnsen wrote in a financial bulletin.

High feed sales
He further added that one can expect the development of increased biomass to continue towards year-end, due to high feed sales in October and November, as well as continued high temperatures in the sea.

According to Akvafakta, 166,859 tonnes of fish feed were sold for salmon and trout in the weeks 45-48. This is five per-cent more than in the same period in 2019.

Biomass figures are higher than both Carnegie’s and the market’s overall expectation, with the former modeling for a 5.7 per-cent growth in 2021.

Flat prices?
“However, with an increase in the 2020 generation not appearing to stop, along with a trend of holding volumes back to optimise capacity (MAB), we see the current consensus for supply growth in 2021 as too cautious. In our opinion, the updated biomass figures indicate a volume growth of 7-10 per-cent for 2021 from Norway,” the analyst wrote.

Thus, salmon price expectations for 2021 are also too optimistic and a more likely scenario is flat prices on an annual basis in 2021, he said.

“This, in turn, indicates that estimates for earnings per share in the aquaculture sector are 20-50 per-cent too high for next year,” Johnsen wrote.