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Salmon & Trout
New Chilean regulations limit salmon supply growth [November 2016]
As global demand shows little sign of abating, prices for farmed salmon have been pushed steeply upwards over the last six months as the market adjusts to multiple supply limiting developments. These include algal bloom mortalities and new regulations in Chile, problems with sea lice in Norway and lower global wild harvests. Profitability is strong for Norwegian farmers, but wild producers, Chilean farmers, processors and wholesales are not benefitting to the same extent.

As Norwegian farmers continue to face difficulties with sea lice, farmed Atlantic salmon production in the country is expected to decrease by 2% this year to approximately 1.2 million tonnes. In May, total standing biomass at farms was down 4% compared with May 2015, with a relatively higher proportion of younger generation fish and a lower average weight. The shortage, particularly for larger sizes, has seen prices spike repeatedly to higher and higher levels. As of week 24, the weighted NASDAQ salmon index hit NOK 74.8 per kg (EUR 8 per kg), some 45% higher than the same week in 2015.
Salmon export volume out of Norway in the first three months of 2016 was 6% lower than the same period in 2015, to total 227 000 tonnes. In value terms, exports were up 20.7% over the same period, due to the elevated price level. The average price for fresh whole Atlantics over the first quarter of 2016 was NOK 58.9, 28.5% higher than in 2015, yet demand in Norway's major markets was not overly affected. In particular, the large EU market, constituting 74% of Norwegian export value, imported NOK 9.9 billions worth of salmon from January to March, 23% more than in 2015.
The most important growth markets for Norway in the first quarter of 2016 were Italy, the USA and Viet Nam. Total volume of Norwegian salmon exports to these markets increased by 5.8%, 10.9% and 83.8% respectively. Buyers in Italy and Viet Nam are primarily interested in fresh whole Atlantics for reprocessing, while in the USA, Norwegian exporters are rapidly expanding their share of the fresh fillet segment, helped by the strong US dollar. Aside from the USA, Asian markets are also being targeted by the Norwegian industry as a growing, urbanized middle-class there represents an enormous source of future demand for salmon. Thailand in particular has been identified as having great potential given the strong increasing trend in salmon consumption.

The Norwegian's industry top challenge remains sea lice, and one possible solution currently being pursued is the development of offshore sites. Salmon kept in offshore pens are generally less susceptible to sea lice infestation and the large aquaculture companies are scrambling to apply for a total of 27 development licenses on offer while also investing in offshore farming technology. For the foreseeable future, however, costs of sea lice treatments will be more than offset by the extreme price levels which are resulting in healthy margins, record profits and soaring stock prices for Norwegian farming companies. And with a widening gap between supply and demand, reflected by regular upward revisions of forward prices over the last six months, the outlook for the industry's producers is ever more positive.

Algal bloom mortalities in Chile have salmon prices climbing even higher [June 2016]
News in the salmon sector for 2016 has so far been dominated by reports of a massive algal bloom in southern Chile that had killed some 27 million fish by 10 March. Compounded by an expected drop in production in Norway where growth is currently limited by sea lice issues, the supply shock has driven up previously depressed Chilean farmed salmon prices while already high Norwegian prices have been pushed even further upwards.

According to a recent Nordea market report, total Norwegian production of Atlantic salmon is forecast to fall by some 5% in 2016, to approximately 1.18 million tonnes. A major factor behind the drop is the difficulties of the industry in controlling sea lice at farms, for which standard treatments are becoming less effective. Although the number of lice per fish is lower than it was previously, the cost of keeping these numbers down is higher and the Norwegian government is restricting licensing of new farms based on strict sea lice limits.

The recent events in Chile and the expected negative growth in Norway has inevitably seen prices jump to exceptionally high levels in early 2016, following the end-of-year spike due to already tightening supply in the latter half of 2015. As of week 9 of 2016, the NASDAQ salmon index was at NOK 61 per kg for fresh whole Atlantics, around NOK 24 higher compared with the same week of 2015. These near-record prices are being maintained by a now very limited supply of fish and strong demand in the EU and the USA, with the EU forced to pay more to compete with the USA’s recent currency advantage.

This price hike has seen the value of Norwegian salmon exports in the first two months of 2016 rise by 17% year-on-year to NOK 8.4 billion (144 860 tonnes of fish, -2% in quantity), which follows an already strong year of export performance in 2015. The EU market continues to absorb large volumes of salmon despite spiking prices, buying a total of 110 000 tonnes of fish worth NOK 6.2 billion in the first two months of the year, representing a 2% drop in volume and a 19% increase in value. The Norwegian krone has weakened versus the euro over the last two years, allowing exporters to more easily pass on higher prices to buyers, although in the USA this effect has been even more prominent. A strong US dollar has driven the value of Norwegian salmon exports to the USA up by 25% to NOK 473 million in the first two months of 2016, and volume up by 6% to 5 920 tonnes. Other markets in the Middle East as well as in East and Southeast Asia are also showing strong demand growth, with Eastern Europe the only region suffering a drop in imports.

Three critical factors, including biomass levels being lower than they were during the last two years at Norwegian farms, currency trends continuing to favour Norwegian exporters and Chilean supply taking a heavy hit, mean that the industry can expect the current price level to be more than temporary. This forecast is reflected in an average forward price at FishPool of NOK 57 per kg for the remainder of the first two quarters of 2016. Although producer bottom lines will certainly benefit, despite increasing biological costs, exporters and processors will be wary of the risks of increased volatility and margin squeezes due to resistance further down the supply chain.

Salmon - December 2015 [December 2015]
Problems are mounting for the Chilean farmed salmon sector, with prices now down at 2012 levels and production costs already well above other producing countries. Due to a range of different factors, demand for Chilean fish has suffered in all major markets and revenues are well down. In contrast, Norwegian farmers continue to enjoy high prices and resilient EU demand. In the wild salmon market, meanwhile, both Russian and Alaskan fishermen have been seeing exceptionally good catches this year. In Alaska, the total recorded wild salmon harvest is the second highest of all time, at 257 million fish. This is not good news for exporters, however, particularly when the US dollar is as strong as it is now.

Norwegian salmon prices started off 2015 around NOK 5 per kg below 2014 prices as high early year volumes had to be absorbed without the assistance of the Russian market. However, the situation reversed itself in the third quarter. Harvesting switched to a new generation, fish weights decreased, temperatures fell, biomasses dropped and the krone depreciated against the euro, pushing prices above 2014 levels where they have remained. Forward price consensus at Fish Pool would suggest that the market is also increasingly optimistic about Norwegian prices over the next two years.
For Chilean salmon prices, however, heavily depressed demand in the top markets has seen a steep drop in export prices to almost all destinations. In week 42, the price for fresh Atlantic fillets on the US market was at USD 7.23 per kg compared with USD 9.30 per kg for the same week last year. Meanwhile, in the wild salmon market, exceptionally good catches have kept prices down for pink and sockeye in particular.

Salmon Market Report - January 2009 [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 today’s 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.
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Salmon Market Report - February 2008 [February 2008]

The period between November 2007 and January 2008 has been a particularly turbulent one for the farmed salmon market. After a prolonged phase of strong supplies, the increased demand around Christmas, coupled with the bad weather, resulted in a decline in salmon supplies. Therefore, prices picked up between mid-December and mid-January. However, towards the end of January, supplies of Norwegian salmon started to increase once again against a diminishing demand, thus leading prices to fall by 10 percent. At the time of the preparation of this report (mid-February 2008), prices were still declining.
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Tuesday 30 May 2017
Top Info


Fish Info Network Directors meet at Conxemar, Vigo
In October each year the Spanish Association of Wholesalers, Importers, Manufacturers and Exporters of Fish products and Aquaculture (Conxemar) organizes the International Frozen Seafood Exhibition in Vigo, Spain.

Back to back with this event Conxemar jointly holds an international conference together with FAO. This year the conference was dedicated to cephalopods, a group of molluscs that includes squids, cuttlefishes, and octopus. The conference also provides the backdrop for various side events such as the Vigo dialogue on decent work in fisheries and aquaculture, and the meeting of the Fish Info Network (FIN).
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