Prices increase despite tremendous supply growth from Norway.
After a rather demanding start to the year, with far too many fish harvested and extensive pandemic closures, the salmon market and the spot price have done surprisingly well.
This is despite the fact that Norwegian fish farmers, with their cages brimming with fish, have been running double shifts at the processing plants for months. Market leader Norway’s export volume increased by as much as 16.4 per cent so far this year. Considering that the so-called HoReCa market (hotel, restaurants and catering), which usually accounts for almost 40 per cent of the total, has still not fully recovered, this should normally indicate low salmon prices this year.
That has not happened. The average price so far this year (FCA Oslo) is just under NOK 58 (US$6.48) per kilo.
When one considers the fact that Norwegian farmers this year have bought 14 per cent more fish feed than they did at the same time last year, one knows that the growth in the sea is impeccable and that it will continue to generate heavy harvest volumes in the coming months.
Demand for salmon has historically risen by 6-8 per cent annually. In what is hopefully the last phase of the pandemic, there is basically no reason to assume that demand growth this year will be at the upper end of the scale.
With this backdrop; how can salmon prices remain so strong?
“There is a shortage of what comes out of Chile. And there is good accessibility out of Europe. The east coast does not have much fish,” salmon salesman Ed Stanton in Boston-based fish wholesaler John Nagle told SalmonBusiness at the end of July.
After Norway was thrown out of the US market in 1991, Chile has been a court supplier to the Americans. Now they do not have enough fish. American buyers have increased their imports of salmon fillets from Norway by 35 per cent this year.
Today we got a new sample of the problems in Chile. The fish farming company Salmones Camanchaca saw slaughter volumes fall by as much as 40 percent in the second quarter. The negative effects of the algae shock last spring still weigh on the world’s second largest salmon farming nation. Salmones Camanchaca is not alone in struggling with biological production.
As we say in Norwegian, one man’s death is another man’s bread.
One of those who has profited from the loss of goods from Chile is the Lerøy Group. The company’s market value has doubled in ten months. In Lerøy’s quarterly report, which was published this morning, it appears that the company estimates a global supply growth of a meager 2.7 per cent this year.
It is not much, and above all reflects that salmon production outside Norway’s borders is clearly negative and far from what a growing market needs in terms of supplies.