Salmon market looking tight for a long time to come

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Supply and demand-side conditions suggest high salmon prices in the time to come.

Warm seas and the risk of increased lice may put pressure on operations and thus the price of salmon. Alf-Gøran Knutsen, CEO of the fish farming company Kvarøy Fiskeoppdrett, believes.

“Now it’s hot during the day, and there’s early warm in the sea as well. So it depends on the lice challenge. If it’s going to be a lice season, I’m guessing we’ll see the NOK 100 (EUR 9.9 .ed) per kilo at Christmas week, as we had a few years ago,” Knutsen told SalmonBusiness’ sister site ilaks on Monday.

Dynamics
Ragnar Nystøyl, head of analysis at company Kontali Analyse, followed this up. He expects a tight salmon market in the future.

“As we know the dynamics of the market, we are on the threshold of a period that is likely to result in high salmon prices,” Nystøyl told the news site E24.

A key explanation is that production in Chile, the world’s second-largest exporter after Norway, is expected to fall by as much as 15 per-cent in 2021. The last time Chile’s production fell so dramatically was in 2016, when an outbreak of toxic algae killed huge amounts of fish, sending the spot price of salmon up by as much as 50 per-cent.

“The comparison with 2016 is natural, especially for Chile, because we have to go all the way back to that year to find as low a biomass level as we now estimate for Atlantic salmon,” said Nystøyl.

Consumption has been moved
Another who  expects rising prices is Atlantic Sapphire boss Johan Andreassen. He pointed out that high supply growth and COVID-closed restaurants and hotels, which combined have put pressure on the price of salmon.

“But as a consequence, salmon consumption has been moved to grocery and online sales, which means that we are now coming out of the pandemic with a restaurant segment that is expected to flourish sharply. At the same time, we are entering a period of negative supply growth, which is a cocktail that speaks for high salmon prices,” Andreassen wrote in an email to E24.