Salmon beginning of the year prices and global forecast for 2021

Published 2021년 1월 12일

Salmon farmers had a difficult year in 2020. The pandemic has closed down consuming countries, food services, and disrupted logistics, causing an oversupply and a huge drop in its price. Virtually no growth is expected in production volumes for 2021 and prices might rise due to less availability especially from Chile.

Norway’s Salmon start the year with weak prices

Atlantic Salmon from Norway started the year with weak prices after a short recovery before Christmas of 2020. The price in week 2 of 2021 is reported to have decreased to NOK 43 per kg on 4-5 kg salmon which is a decrease of NOK 4 per kg in a week. The same fish was been sold for NOK 54 per kg in the last week of 2020. Another source from the Salmon Business website stated a much steeper drop of 15% in the first week of the year reaching FOB EUR 3.8-3.9 per kg for most traded fish sizes. The reason for the sudden slump in prices are not yet clear, but it was reported that massive volumes were harvested in December until the New Years’, with an increase of 17% in comparison to previous weeks, which could have caused an oversupply for this period and affected the prices. The YoY drop in price from Nasdaq’s Atlantic Salmon Index for the 7-8 kg fishes is close to 50%. Due to low pricing, many producers have been delaying the harvest as they go into the low season, and it is a time with historically the biggest fishes but the market is not willing to pay a premium for the bigger sized which is usually the case. Farmers expect that this could be the hardest quarter for Norway’s salmon farmers in the pandemic as the second wave of COVID-19 is coming in strong in Europe.

Source: Undercurrent

Chilean Salmon starts to stabilize

Chilean Salmon’s prices were very unstable throughout 2020 with a downward trend. The price hit a 43% YoY low in November for 10-12lbs salmon with an average FOB price of USD 3.26 per kg. In November it hit the lowest in eight years and hit average pricing of USD 2.84 per kg. The December holiday season has brought a revival for the salmon market and achieve an average FOB pricing of USD 5 per lbs. The prices of Chilean Salmon seems to finally stabilize for now and started the year with spot prices at a high of USD 0.05 per lbs with FOB USD 5.10-5.25 per lbs for 2-3 lbs, USD 5.20-5.35 per lbs for 3-4 lbs and USD 5.30-5.45 per lbs for 4-5 lbs for D-trim fresh fillets sold to Miami on January 7th according to Undercurrent. The reason for the stabilization of prices is given to the slow opening of consuming markets and higher demand from the US, Brazil, and Russia.

Chile Salmon farmers had a rough year. The COVID-19’s social distancing actions have greatly limited the hospitality industry which absorbed substantial quantities of salmon. The lockdowns affected the transportation of fresh salmon which is most preferred by Americans and Europeans, by disrupting air cargoes and delays in inspections due to reduced personnel. The reduction of working hours and labor in the farms as well meant that their salmons got significantly bigger and with the reduction of trade, it caused an oversupply for the last crop. The Chilean farmers are cautious for the next crop and will be reducing the production for 2021 by 15-20% to avoid losses and to stabilize prices.

Source: Undercurrent

Rabobank’s forecast for 2021

According to Rabobank’s forecast, global salmon production shall have 0-2% in growth. Although Norway is the biggest producer with an expected increase of 4% in production, it will be canceled out by Chile’s reduction of 15-20% in production, which is the second world producer of Atlantic salmon. This will mean a reduction of around 10% in exports which will tighten up the supplies and force the prices up. The expectations on the recovery of consuming markets and reopening of food services will also help on the elevation of prices.

Recirculated Aquaculture System(RAS)-based Salmon Farming could be the next big thing

The first large-scale RAS-based Salmon was harvested in 2H2020 and it might be the beginning of a trend. The inland RAS for salmon production promises an eco-friendly process, with a low carbon footprint, optimal water management, and closeness to the consumers market which will mean a fresher salmon. There is a big list of companies already starting to build or populate their inland tanks on this new method of production. The expected output in coming years is about 1.6 million MT or 70% of 2020 production and its developments in 2021 are of great interest for the segment.