How long can salmon price boom last?

EUROPEAN salmon farmers have entered 2017 after a record breaking 2016 in terms of revenue growth, says the FAO’s January European Price Report, released today.

They will now be weighing up the uncertainties that will determine whether the boom can be sustained over the next 12 months, according to the report, produced by Globefish.

Recent figures published by the Norwegian Seafood Council (NSC) put the total value of salmon and trout exports from Norway in 2016 at a remarkable NOK 65 billion, or almost EUR 7 billion, about 29 per cent higher than the equivalent figure for 2015.

These impressive export revenues were the result of exceptionally high prices rather than particularly high volumes, with Norwegian salmon exports down 5.2 per cent in volume terms to 53 340 tonnes in 2016.

This contributed to a global supply crunch that saw farmed salmon prices soaring to historic highs.

The NASDAQ salmon index broke the NOK 80/kg mark on two separate occasions in 2016, once in mid-year and again in late December as seasonal demand sent prices surging upwards once again.

In the first weeks of 2017, reports suggest that demand is faltering somewhat as festivities wind down and the current price level becomes unpalatable to buyers of Norwegian fish.

In the UK, however, very tight supply and a weak British pound is preventing a downturn in prices for the time being at least.

The UK farmed salmon sector has also seen revenues boosted significantly by the price levels, with a decrease in sales to the US offset by strong demand from European and Asian buyers.

Temporary drops in the spot price for fresh farmed salmon are typical for this time of year, says Globefish, and the longer term supply and demand balance in the salmon market is still one that should support prices at the new higher plateau, ranging from NOK 60-70/kg.

However, the industry is keeping a close eye on developments in both the production and the market side that could alter the underlying fundamentals.

Firstly, the profitability of salmon farming at present price levels means that the major salmon aquaculture companies are continuously seeking new geographic and regulatory opportunities for expansion.

New projects are being put forward in Ireland and Iceland, while the Scottish authorities are set to discuss a revision of rules on biomass limits to allow for accelerated sector growth.

On the market side, there is some concern that the impact on consumers of extreme raw material costs filtering down the supply chain could be significant over the next year as demand is eroded at an accelerating rate.

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