Salmon, January 2009

 



Speculations about sharp reductions in 2009 salmon production

The farmed salmon market is dominated by speculation about 2009 and whether the reduction in Chilean production will reduce total global supply and therefore push prices higher than todayís
levels. In 2008, supply has increased both from Norway and Chile, but in the case of Chile mainly because of accelerated harvesting of fish with the result that 2009 output will be much less than forecasted previously. Norwayís production in 2009 will continue to grow along with that of the UK and the Faroe Islands.

Higher prices forecast

The overall market for salmon in 2009 is expected to be positive with moderately higher prices due to the expected shortfall in Chilean supply. Salmon sales have previously shown to be resilient in difficult times and with an estimated income elasticity estimated at around 1, sales are expected to hold up relatively well next year. Overall demand is expected to increase by about 5%. 2010 however could be difficult for producers if the Chilean production comes back on stream.



The big question is therefore what will happen in 2009. Most analysts forecast much stronger supplies from Norway as well as from Scotland and the Faroe Islands. Chile's production is expected to fall drastically in 2009 as a result of disease outbreaks and accelerated harvesting in 2008. World demand is expected to grow only moderately next year at around 4-5%. Depending on the amount of production coming out of Chile in 2009, the net result on supply could be a slight decline with prices firming as a result from today's levels.

Norway

Norwayís
export volumes in 2008 of both salmon and trout continued to grow from last year although export values were only slightly up. Trout volumes in particular showed good growth from 2007. Of interest is that a larger share of Norwayís exports now are represented by fresh salmon whereas frozen round salmon and frozen fillets were both down.



Norwegian export statistics up to November 2008 show unchanged average prices from last year at NOK 24.90/kg. Both volumes and values were up by the same figure, 2.3% compared with the first 11 months of 2007.

On the positive side for Norwegian exporters was also the abolishment in July 2008 of the EU minimum import price regime.

The EU continued to grow as a market for Norwegian salmon, up 4.5% in volume and 3.6% in total value. Both France and Poland are showing strong growth in their imports from Norway whereas Denmark is declining as a result of the transfer of its processing facilities to Eastern and Central European countries. Russia and the Ukraine are also showing significant growth together with the much smaller markets of Romania and Bulgaria. Both Japan and US imported less salmon from Norway in 2008.

The industry outlook for Norwegian exports in 2009 is fairly positive, in part due to problems in Chile, its main salmon competitor. But competition from new players and products such as Viet Namís
pangasius fillets is felt keenly, even in the domestic market.

Chile

Chileís
export volumes in 2008 show good growth but in reality, the main reason for the increase is accelerated harvesting of fish which was planned to be harvested in 2009 at higher average weights. This means that the fish exported in 2008 was also at lower average weights than before and this is one of the reasons why average prices form Chileís exports fell significantly compared with 2007. The resulting loss of growth will hurt Chileís producers in 2009 with a projected decline in production next year of dramatic proportions.



Japan is Chileís
major market followed by the US whereas its neighbouring countries in South America have overtaken Europe as Chileís third largest market in volume. The EU is still Chileís third largest market measured in value due a larger share of processed products.

Markets

USA

After many years of steady growth, the US market for imported salmon declined slightly in the first nine months of 2008 although fresh fillets still showed an increase. Chile is by far the dominant supplier followed by Canada.

Japan

After many years of weaker salmon sales, Japanís
salmon and trout imports in 2008 have been rising somewhat compared to previous years. Chileís exports of trout and salmon to Japan rose 8% in volumes but fell 8% in value. On the other hand, Norwayís salmon exports to Japan in the 11 months of 2008 fell in both volume and value, by 17 and 11% respectively, although Norway is a much smaller player in the Japanese market than Chile which is dominating all segments: trout, Atlantic salmon and coho salmon markets.

The conclusion must be that the Japanese market is able to consume more salmon and trout, given the right price.

Europe

Demand for salmon in the EU is still good. Norwayís
exports to that market grew from 460,000 to 481,000 tons (round weight equivalents) in the first 11 months of 2008, or 4.5%. France is by far the largest taker of Norwegian salmon followed by Poland which has overtaken Denmark. Denmark has fallen back as an importer and processor as continental smokehouses have migrated to Poland from Denmark, Germany, Belgium but also France and Italy.

Russia and the Ukraine are also showing good growth as markets for Norwegian salmon in 2008.

France

As for other seafood products, French salmon imports have increased in 2008. However, the French consumerís
mood appears to be changing for the wors
e so 2009 will probably see a stagnation in salmon sales compared with 2008.



Germany

Germanyís
total salmon imports declined by almost 9 % over the first three quarters in 2008: the main decline was for fresh whole salmon whereas smoked salmon imports grew and fillet imports were fairly stable. One of the reasons why smoked imports are increasing is the outplacement of most of the German smoking industry to neighbouring Poland.



Outlook

Regarding the salmon supply situation in 2009, the forecast goes to a substantial growth in the European production and a massive reduction in Chile, with the net result being a decline, although the extent is uncertain due to the increasing severity of the Chilean problem and the range of production estimates available.



In Chile ISA outbreaks could cause production in 2009 to fall by as much as 40-50%, a reduction from 375,000 to about 220, 000 t. according to the various estimates.

In 2009 Norway will grant 65 new salmon farming licenses resulting in new capacity of 7%. 5 of the licenses will be for organic salmon. This new capacity will of course only come on stream in 2010 or 2011.


Report prepared by Audun Lem
© FAO GLOBEFISH 2009

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